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Critical success factors of Jewish Entrepreneurs: A South African Perspective

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Critical success factors of Jewish Entrepreneurs: A South African Perspective
Critical success factors of Jewish Entrepreneurs:
A South African Perspective
Justin Milner
12258238
A research project submitted to the Gordon Institute of Business Science,
University of Pretoria, in partial fulfilment of the requirement for the degree of
Master of Business Administration.
03 October 2012
© University of Pretoria
Copyright © 2013, University of Pretoria. All rights reserved. The copyright in this work vests in the University of Pretoria. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of the University of Pretoria.
Abstract
This study aims to explore the critical success factors of Jewish entrepreneurs
in South Africa. The primary purpose of this study was to determine what
elements contribute to the success of Jewish entrepreneurs and what causes
these elements.
In doing so, these entrepreneurs were classified into two groups, namely
successful and less successful.
For the purpose of this study success was measured using two variables:
1. Turnover
2. Growth
Turnover - for the purpose of this study an annual turnover of R2 000 000 was
used as an indicator to classify the different companies into successful and less
successful. If a company turned over more than R 2 000 000 then it fell into the
successful category and vice versa.
Growth - growth was measured by the increase/decrease of three employees
from the companies’ inception until its current state.
It was evident that culture plays an extremely important role in this study which
was confirmed by the literature. The co-ethnic ties within the Jewish community
are extremely strong and are a major contributing factor.
Information was gathered via the means of a questionnaire consisting of 28
questions. 50 questionnaires were sent out and 32 were received back. From
these 32 responses, the author extracted the relevant information.
The author discovered that Jewish people in South Africa are an ethnic minority
and was unable to pinpoint an exact reason for the success of Jewish
entrepreneurs in South Africa.
ii
Keywords
Jewish, Entrepreneurship, Success, Ethnic Group.
iii
Declaration
I declare that this research project is my own work. It is submitted in partial
fulfilment of the requirements for the degree of Master of Business
Administration at the Gordon Institute of Business Science, University of
Pretoria. It has not been submitted before for any degree or examination in any
other University. I further declare that I have obtained the necessary
authorisation and consent to carry out this research.
Justin Milner
03 October 2012
Signature
Date
iv
Acknowledgements
First and foremost I would like to thank my supervisor, Dr. Alex Antonites, for
the unbelievable support, insights and direction. For always beliving in me and
pushing me till the end.
My family for their constant support and understanding through this proccess.
My friends who stood next to me during this process.
My editor Jennifer Renton for her great effort
v
Table of Contents
Abstract…………….………….………………………………………………………ii
Keywords…………….…….…………………………………………………………iii
Declaration…………….….………………………………………………………….iv
Acknowledgements…….……………………………………………………………v
Figures…….…………………………………………………………………………viii
Tables…….………………………………………………………………..………….ix
Chapter One…………….…….………………………………………………………1
Chapter Two……………….…..………………………………..……………………6
2.1 Introduction……………..….………………………………...……………………6
2.2 What is entrepreneurship?............................................................................6
2.3 Entrepreneurship in South Africa………………...……………………………11
2.4 Types of entrepreneurs…………………………………………………………13
2.5 Defining success……………………………………...…………………………18
2.6 Culture…………………………………………………………………………….19
2.7 The ethic entrepreneur………………………………….………………………23
2.8 Conclusion………………………………………………………………………..25
Chapter Three …………………………………………………...………..………..26
3.1 Introduction………………………………………………………..……………..26
3.2 Research Questions…………………………………………………………….26
Chapter Four…………………………...………..………………………………….29
4.1 Research design……………………..………………………………………….29
4.2 Sampling method……………………..…………………………………………30
4.3 Sample size……………………………..……………………………………….33
4.4 Unit of analysis…………………………..………………………………………33
4.5 Population of relevance…………………..…………………………………….34
4.6 Data collection process……………………..…………………………………..34
4.7 Statistical analysis…………………………..…………………………………..36
4.8 Reliability………………………………………..………………………………..38
Chapter Five.………………………………………..………………………………45
5.1 Introduction……………………………………..………………………………..45
5.2 Classification of data…………………………..………………………………..45
5.3 Demographic information………………………………………..……………..45
vi
5.4 Nature of business industry………………………...………………………….46
5.5 Age………………………………………..………………………………………47
5.6 Highest Level of Academic Qualification……………………………………...47
5.7 Business age………………………………………..…………………………...48
5.8 Employees………………………………………..………………………………49
5.9 How the respondents became owners………………………………………..50
5.10 Sources of capital………………………………………..…………………….50
5.11 Parents owned a business………………………………………..…………..51
5.12 Family members involved in business……..………………………………..52
5.13 Time spent on different business activities …………………………………55
5.14 How do you know what customers want? …………………………………..56
5.15 Annual turnover………………………………………..……………………….58
5.16 Value………………………………………..…………………………………...58
5.17 Financial assistance in the last 12 months………………………………….59
5.18 Future plans for the business…………………………………………………60
5.19 Personal characteristics………………………………………..……………..61
5.20 Motivation to start a business...………………………………………………62
5.21 Importance of business experience………………………………………….65
5.22 Importance of business skills…………………………………………………66
Chapter Six…………………………………………………………………...……..68
6.1 Research questions and outcome……………………………………...……..68
Chapter Seven.…………………………………………………………………….104
7.1 Introduction……………………………………………………………………..104
7.2 Summation of the literature…………………………………………………...104
7.3 Research questions……………………………………………………………105
7.4 Findings…………………………………………………………………………105
7.5 Contribution……………………………………………………………………..106
7.6 Further research………………………………………………………………..107
7.7 Limitations of the study………………………………………………………..107
7.8 Conclusion ……………………………………………………………………..108
References…..…………………………………………………………………..…109
Appendix One……………………………………………………………………...119
vii
Figures
Figure 1: Gender of respondents
Figure 2: Nature of business industry
Figure 3: Level of education
Figure 4: First business started
Figure 5: How the respondents became owners
Figure 6: Source of capital used
Figure 7: Parents who owned a business
Figure 8: Business similar to parents
Figure 9: Family members involved in business
Figure 10: Who is involved?
Figure 11: Depend on Family to run the Business
Figure 12: Networkof family and friends that are self-employed
Figure 13: Description of the market the business operates in
Figure 14: Hours worked per day
Figure 15: Hours spent on doing different business activities
Figure 16: Knowledge of what customers want
Figure 17: Approximate annual turnover
Figure 18: approximate value of the company
Figure 19: External financial assistance required in the last 12 months
Figure 20: Future plans for the business
Figure 21: Importance of business experience
Figure 22: Importance of business skills
46
46
47
48
50
51
51
52
52
53
53
54
54
55
55
57
58
59
59
60
65
66
viii
Tables
Table 1: Defining entrepreneurship
Table 2: Age of respondents
Table 3: Age of business
Table 4: Number of businesses started
Table 5: number of employees
Table 6: Hours spent on doing different business activities
Table 7: Knowledge of what customers want
Table 8: Future plans for the business
Table 9: personal characteristics
Table 10: Motivation to start a business
Table 11: Importance of business experience
Table 12: Importance of business skills
Table 13: External financial assistance required
Table 14: Level of education in the success groups
Table 15: Importance of business skills
Table 16: Gender in the success group
Table 17: Age of respondents
Table 18: Family involvement in the success groups
Table 19: Family dependance to run a successful business
Table 20: Successful business with a network of family and friends that
are self-employed
Table 21: Is this your first business?
Table 22: How the entrepreneurs became owners
Table 23: Did the entrepreneur’s parents own a business?
Table 24: Similarity of business to parent’s
Table 25: Personal factors of entrepreneurs
Table 26: Motivation for starting a business
Table 27: Academic Qualification and the number of businesses
started
Table 28: Academic qualification and the number of hours worked per
day
Table 29: Increase in the number of employees per year and hours
worked per day
Table 30: Hours worked per day and number of businesses started by
the entrepreneur
Table 31: Number of years the business has existed
Table 32: Approximate value
Table 33: Hours worked in the success groups
Table 34: Time spent on the financial matters in the success groups
Table 35: Time spent on marketing and sales in the success groups
Table 36: Number of hours spent managing people in the success
groups
Table 37: Number of hours spent on operational issues in the success
groups
Table 38: Market description
8
47
48
49
49
56
57
60
61
63
65
67
69
71
72
73
74
75
76
77
79
79
81
82
83
85
89
90
91
92
93
95
96
97
98
99
101
102
ix
Chapter 1: Introduction
The general review of entrepreneurship development over the past two
decades has resulted in a solid foundation for declaring entrepreneurship to be
a discipline that is studied in various formats and platforms.
The socio-
economic impact, positive economic growth relations and evidence on several
developmental aspects of the entrepreneurial ecosystem, shaped a construct
that provides for further investigation into the more specific performance related
elements of the entrepreneurial process (Bosma & Levie, 2009). When looking
at the entrepreneurial process and ethnic entrepreneurs, Bosma, Acs, Autio,
Coduras and Levie (2008) reported that organisations started by Indian and
White entrepreneurs are more likely to succeed and grow into big firms than
any other race in South Africa.
Although White and Indian entrepreneurs are more likely to succeed, all
entrepreneurial ventures, ranging from small businesses to large enterprises,
are vital to every economy’s growth and every country’s economic ecosystem.
Entrepreneurship - irrespective of race and religion - is one of the main factors
that can cause economic stability, especially after a world crisis. Through
entrepreneurship economies can grow and become more stable over time.
“Economic stability is an important concern for every nation-state, especially after the
2008 economic crisis. In this vulnerable situation, the world’s economy cannot any
longer being dependent on established corporations only. Small and medium
enterprises (SMEs) led by entrepreneurs, on the other hand, have been proven to be
resilient in the tough times as they create jobs and make a great contribution to a nation
as SMEs act as a cushion to the sudden shocks of economic crises” (Adiguna & Shah,
2012:1).
From the above statement one can draw the conclusion that entrepreneurship
is a vital element in the sustainability and success of any economy. The
importance of entrepreneurship can again be seen as a general uplift to the
country and the economy in terms of job creation and job sustainability (Van
Stela & Storey 2004; Wong, Ho & Autio, 2005; Baptista, Escária & Madruga,
2008).
1
The body of knowledge within the field of entrepreneurship has extensively
reported findings regarding the significant relationship between a high
entrepreneurial activity rate (TEA) and economic growth (Sternberg &
Wennekers, 2005; Van Stel, Carree & Thurik, 2005; Stam, Suddle, Hessels,
Jolanda & Van Stel, 2007).
Van Scheer (2010) supported the latter by quoting Stam E, Suddle K, Hessels
S, Jolanda A. and Van Stel A. 2007 and further by reporting the substantiating
effect of entrepreneurship on an economy. The impact and contribution to
survival and growth and lead through entrepreneurship and small business
development.
Bosma and Levie (2009) distinguished broadly between two types of
entrepreneurs: the business entrepreneur and the social entrepreneur. The
business entrepreneur speeds up structural changes in the economy by driving
and shaping innovation, which inevitably introduces new competition that will
contribute more to productivity. The social entrepreneurs tend to fill a similar
purpose in the social economy, by filling the gaps that are left by the
government (Bosma & Levie, 2009). Wickham (2009) established a clear
differentiating framework that created a distinction between the true business
entrepreneur and the normal small business owner, namely innovation, specific
strategic objectives and a growth orientation. This study will predominantly
focus on the latter and moreover use these variables as selection criteria for
entrepreneurial success.
This study will specifically focus on South Africa, as previous research from the
South African Global Entrepreneurship Monitor reports (2001 – 2011) showed
that there has been a discovery that the less developed a country is, the more
necessity-driven self-employment there is. However through development of
the economy, research shows that the necessity-driven entrepreneurial activity
will decrease as more employment opportunities arise.
Van Vuuren and Groenewald (2007) indicated that entrepreneurial ventures are
fundamental elements in creating jobs and stimulating economic growth. These
ventures also tend to alleviate poverty and improve living standards. This has
been recognised both internationally and locally.
2
According to Statistics South Africa there was recently some growth in the
South African economy, with an increase in the GDP of 3.2% in the 4th quarter
of 2011. This is a 1.5% increase from the 3rd quarter in 2011. Statistics South
Africa has shown that there was an official unemployment rate of 23.9% in the
4th quarter of 2011, and according to the population census there were 50,59
million people in the country as at the end of 2011. This shows that there are
approximately 12,9 million people who are unemployed in South Africa (Census
2011).
Through small entrepreneurial ventures this problem can be alleviated. Since
democracy in 1994 there has been a vast increase in self run and owned
businesses (van Scheer, 2010). Hazed (2008) stated that the small and
medium sized enterprise sector plays a major role in the growth of a country by
creating new job opportunities. This also has the potential to respond to the
changes in the environment. The background to the research question aims to
begin with an investigation into a specific ethnic group of entrepreneurs with
numerous entrepreneurial success stories that evidently contribute directly to
economic growth. Not only will the nature of this group be analysed, but also
the contributing factors in relation to entrepreneurial performance, and likewise
success.
The broad focus of the study will be ethnic entrepreneurship, and specifically
within that construct the South African Jewish entrepreneur. The meaning of
what an ethnic entrepreneur is can be seen when looking at a general
definition. The activities of an entrepreneurial nature performed by individuals
that are linked to a group with a common cultural heritage (Adiguna & Shah,
2008).
The Jewish culture shares a religion that unites them all over the world today,
but when immigrating to South Africa in the early 1900s the unity that kept them
together was cultural structure, heritage and a common fight for survival. Very
little literature and scientific evidence exists pertaining to the entrepreneurial
nature, characteristics and business models of this ethnic group in South Africa.
Empirical studies conducted by Aldrich and Rosen (2007) showed that ethnic
entrepreneurs make the most use out of informal networks. These informal
3
networks for Jewish entrepreneurs are people like family, friends, and
acquaintances within the Jewish community, who gather information rather than
relying on a formal network such as bankers, lawyers and accountants.
Furthermore, a study by van Scheer (2010) showed the relationship between
ethnic businesses and their co-ethnic customer base, which gave the firms a
better competitive advantage. This goes to show how each ethnic group is
supportive of their co-ethnic counterparts, and there is a positive relationship
between ethnic businesses and their co-ethnic customers. Co-ethnicity is a
common cause of the ultimate success of the original ethnic start-up. Over time
the ethnic brand will grow and in its ultimate stage become accepted as a local
brand and be widely desired by the local population (van Scheer, 2010). An
array of success stories emanate from this ethnic group, which has a rich
history of entrepreneurial success.
Makura (2010) compiled a list of the most successful entrepreneurs in South
Africa, of which 80% were Jewish, which ignited and substantiated the support
for a study of this nature. The study aims to analyse how these entrepreneurs
became successful and how, if in any way, the Jewish community at large had
any contribution to this success. There has been extensive research conducted
on many other ethnic groups in South Africa and an inordinate amount of
information has been discovered via the process of research. The lack of
substantiated evidence on the Jewish entrepreneur specifically created a need
for this research intervention. The information that will be gathered will provide
a greater, more in-depth view of how and why Jewish entrepreneurs are
claimed to be so successful and what leads them to achieve this.
Bruder (2011) discovered that ethnic entrepreneurs face racial discrimination
when applying for finance. The results of the study showed that an ethnic
entrepreneur who did not hold a local passport was subject to discrimination, as
they were not granted the required finance to fund the start up of their business.
From this study it is evident that ethnic entrepreneurs may be perceived as
survivalist entrepreneurs, as they do not get the same advantages as local
entrepreneurs would. Coupling this statement into the previous one - how co4
ethnicity contributes to the survival of ethnic firms - there is evidence showing
how ethnic entrepreneurs rely heavily on their community to get started and for
on-going support, as there is a high level of financial discrimination against
them.
The Jewish community arrived in the early 1900s in South Africa with a high
level of education - mainly amongst the youth. Of this community there was a
large percentage of the older immigrant population that were uneducated when
arriving in South Africa. These uneducated immigrants had to find a means to
support themselves and did so through entrepreneurial ways. One could hereby
derive a push factor which contributed to eventual entrepreneurial performance.
Through a questionnaire as a research instrument, the author aims to discover
what impact the level of education, number of hours the entrepreneurs worked
per day, level of family involvement and many other factors have on the
success of Jewish entrepreneurs.
These factors will be used to critically evaluate the success of Jewish
entrepreneurs in South Africa. This leads to the research question of why there
are so many successful Jewish entrepreneurs in South Africa and what the
contributing factors in significant entrepreneurial performance are.
5
Chapter 2: Literature Review
2.1 Introduction
This section will detail the relevant literature embraced by the research problem
that drove this investigation. It will commence with the broader typology of
entrepreneurship and elaborate upon the nature of the construct in the South
African region. There are many different definitions that will be discussed and
many points argued, which enriches the literature. Another core construct is the
types of entrepreneurs and their differences - the cultures, values and norms
that each one possesses. The ethnic entrepreneur is a key element to this
specific literature, which has been and will be discussed further in great detail.
2.2 What is entrepreneurship?
“Over the past 200 years the definition of entrepreneurship has evolved into a
complex set of ideas” (Henderson, 2002:47).
In its most simplistic form
entrepreneurship is the creation of a new firm. Entrepreneurship is “the process
of uncovering or developing an opportunity to create value through
innovation...” (County, 2008: 110).
Fregetto (2010) was of the opinion that
vigorous discussion and observation on the topic of entrepreneurship will
eventually shape the attributes of the construct. It is therefore accepted by the
researcher
that
there
is
no
one
true
definition
of
the
construct
‘entrepreneurship’. The author expands the argument in stating that this is a
lengthy process and one of a dynamic nature with eventual acceptance and
standardisation.
Within this context, attribution development towards defining the construct of
entrepreneurship evolved from an array of studies (Venkataraman, 1997;
Bruyata & Julien, 2001; Iversen, Jørgensen & Malchow-Moeller, 2010).
Kao (2006) and Henderson (2002) indicated that there is an underlying theme
through all the different definitions of entrepreneurship: innovation. Innovation is
creating something new or doing something in a new way in order to gain a
competitive advantage in the formation of a new firm or process. Shinde and
Shinde (2011) recently contributed to the body of knowledge in reporting
entrepreneurship as an economic, profit-oriented activity. They went on to
argue that there are three categories of entrepreneurship and that each one is
6
unique in its own way.
i.
Commercial entrepreneurship
This construct can be defined as a process that contributes to the economy in
many different ways, primarily in profit form through opportunities that have
been taken advantage of through innovation and adaption. There is also a high
level of risk that is taken with a very scarce resource pool, (Shinde & Shinde,
2011:74).
ii.
Institutional Entrepreneurship
This type of entrepreneurship is derived from institutional theory. The theory
speaks to the ability of institutions becoming legitimate agents within an
industry and environment. Thus organisations within a particular environment
will behave in such a manner in order to gain legitimacy and acceptance within
this field. The main element here is not profit or organisation creation, but rather
value creation in order to have an impact on other activities within the
immediate environment (Shinde & Shinde, 2011),
iii.
Social Entrepreneurship
Social entrepreneurship is closely related to the field of entrepreneurship,
however as it is constantly evolving, it is hard to get a true definition of the term.
However there seems to be a general agreement that the definitive aspects of
social entrepreneurship are primarily to emphasise social benefit.
This does not necessarily mean that all social operations are set up in a not-forprofit way; rather it shows how social objectives and goals play a major role in
social entrepreneurship.
Schumpeter, an Austrian economist, argued when defining entrepreneurship
that the value creation process played a fundamental role for entrepreneurs in a
free market system and continued further to state that entrepreneurs are
individuals who tend to exploit market opportunity through organisational and
technical innovation. (Schumpeter, 1934, cited in Turan & Kara, 2007).
7
The
Harvard
Business
School
provided
a
modified
definition
of
entrepreneurship as, “the pursuit of opportunity without regard to resources
currently controlled” (Turan & Kara, 2007:2). Johnson (2010) postulated that the
entrepreneur is a person who is taking on the risk and the uncertainty of a
specific task in the exchange for profit, however there are entrepreneurs who
prefer to be their own boss or who start businesses for social benefit. From this
perspective, entrepreneurship is seen as a particular type of managerial
behaviour available to virtually all managers in organisations of all kinds and
sizes (Turan & Kara, 2007).
This definition of entrepreneurship was first heard in 1848 and was carried all
the way through to the late 19th century, explains Timmons (1999:218).
Table 1: Defining entrepreneurship
Date
Researchers
Characteristics
1848
Mill
Risk propensity
1917
Weber
Source of formal authority
1934
Schumpeter
Innovation and initiative
1954
Sutton
Need for responsibility
1959
Hartman
Source of formal authority
1961
McClelland
Risk propensity and need for
achievement
1963
Davids
Ambition;
need
interdependence,
for
responsibility
and self confidence
1964
Pickle
Driving
force,
communication,
technical knowledge
1971
Palmer
Risk assessment
1971
Hornaday & Aboud
Performance
motivation,
8
autonomy,
aggression,
power,
innovation and independence
1973
Winter
Power need
1974
Borland
Internal locus of control
1974
Liles
Performance need
1977
Gasse
Personal value orientation
1978
Timmons
Driving force, self confidence,
calculated risk, internal locus of
control, creativity and innovation
1980
Sexton
Energy, ambition, positive failure
management
1981
Welsh & White
Need for control, responsibility,
self confidence, challenge need,
calculated risk propensity
1982
Dunkelberg & Cooper
Growth orientation, independent
orientation, skills orientation
1982
Scheré
Acceptance of uncertainty and
chaos
1983
Pavetti & Lau
1985
Macmillan,
1986
Conceptual skills
Siegel, Knowledge
SubbaNarishimha
leadership
Ibrahim & Goodwin
Ability
to
of
market
and
delegate,
managing
and
employee
consumer
relationships
1987
Aldrich & Zimmer
Networking
1987
Hofer & Sandberg
Motivation and synergy
1987
Schein
Management skills
1987
Timmons,
Muzyka, Opportunity seeking propensity
9
Stevenson
and Bygrave
1989
Wheelen & Hunger
Implementation of business skills
1992
Chandler & Jansen
Self-analysis
and
opportunity
identification
1992
McGrath, MacMillan en Individualism,
Scheinberg
uncertainty
and
temperament
Source: Adapted from Timmons (1999:218)
A more comprehensive definition of an entrepreneur was derived from the fact
that the contemporary composition and conceptual layout of an entrepreneur is
regarded as a field of study all on its own. For the sake of this study, the
definitions as derived from Cornwall and Perlman (1990:4), Van Praag
(1996:3), Burch (1986:4), Mare (1996:3), Drucker (1985:25); Hisrich and Peters
(1998:9), and Kuratko and Hodgets (1998:31) are used. According to the
abovementioned authors, an entrepreneur is someone who has the ability to
develop a vision from practically nothing. From this the authors went on to say
that this action is one of human nature. Entrepreneurs invest a large amount of
effort into the start-up of an organisation instead of simply overlooking the
process of developing a new company. The entrepreneur is one who tends to
take a calculated risk when the opportunity presents itself.
The types of risks that these entrepreneurs are willing to take are comprised of
many elements, such as personal, financial, psychological and social. The
entrepreneurs go out of their way to ensure that they reach their goals and
ultimately avoid failure. Entrepreneurs do not see the chaos and confusion that
most ordinary people see when presented with a situation - rather they spot the
opportunity. The fundamentals of entrepreneurship shine strong in the
development of the “new”. This may vary from products and services or the
increase in value from the decision making process. Entrepreneurs do not only
seek the financial reward, but also the gratification of independence (Antonites,
2003).
10
Given the scope of this study, the continual aim is to regard concepts and
constructs in accordance with generally accepted definitions. When analysing
the definitions of entrepreneurship and entrepreneurs there is an underlying
element of success. There is a specific path that entrepreneurs try to create or
follow in order to become successful. One of the driving factors for
entrepreneurial activity is success.
As the above literature has shown, there are many different definitions of what
is deemed to be entrepreneurship, however Freggetto’s original argument
stands out, given that it shows how the words entrepreneurship and
entrepreneurial are being widely used in order to define any business activity
that involves risk and uncertainty, along with some kind of reward (Fregetto,
2010).
Through this research the author aims to show a greater understanding of
entrepreneurship and how it may be compared to the above literature. This will
be shown from a South African context. South Africa is the geographic location
of this study, with a focus primarily on Jewish entrepreneurs in South Africa.
2.3 Entrepreneurship in South Africa
Bosma,
Wennekers
and
Amorós
(2011:174)
stated
in
the
Global
Entrepreneurship Monitor (GEM) that South Africa had shown a positive yearon-year increase in its overall TEA (Total Early stage Entrepreneurial Activity
rate) over the last two years. With the TEA for 2011 a record high of 9.14 in
comparison to 5.9 in 2009 and 8.9 in 2010, it must be noted that the country still
lags far behind most comparable economies. Given the country’s high rate of
unemployment, which is estimated at 25% of the population aged between 15
and 64 years, it is not surprising that TEA is driven largely by necessity (35%).
Although a significant proportion of the population exhibits positive attitudes
regarding entrepreneurship, the TEA remains dismally low as fear of failure and
the desirability of formal employment have a moderating effect.
The South African Government has prioritised entrepreneurship and the
advancement of small businesses as the catalyst for achieving economic
growth and development (Bosma, Wennekers and Amorós, 2011). Although
11
legislation has provided evidence of this commitment, there is still much that
needs to be done to create an environment that is conducive to
entrepreneurship.
Over the last decade South Africa has shown extremely low TEA rates,
however since the hosting of the 2010 FIFA World Cup there has been a
positive impact on entrepreneurial activity in the country, and the TEA results
for 2010 were at a record high for South Africa. However South Africa remains
one of the worst performing economies with regard to entrepreneurial activity,
despite its high levels of unemployment, poverty and underdevelopment due to
low levels of education in the country. The low TEA rates also show that there
is a lack of entrepreneurial activity which is having a negative impact on the
country.
Mitchell (2006) presented findings which portrayed the level of entrepreneurial
education in South Africa. They specifically targeted educators in higher
educational institutions in order to measure exactly how developed South Africa
is in its ability to teach entrepreneurship.
Laukkannen (2000), as quoted in Mitchell (2006), identified two areas of
entrepreneurial education:
•
Education about entrepreneurship – This area is designed to develop,
build, learn and teach the different theories that entrepreneurs are
exposed to on a daily basis. It hence develops awareness about
entrepreneurship on a knowledge level. This ranges from organisation
creation
to
levels
of
economic
contribution
and
the
general
entrepreneurial process that entrepreneurial forms go through. This form
of education will take into account undergraduates, masters and PhD
students,
including
researchers
and
policy
makers.
“It
views
entrepreneurship as a social phenomenon” (Mitchell, 2006:350).
•
Education for entrepreneurship. The purpose of the second area is to
provide future potential entrepreneurs as well as current entrepreneurs
12
the skills for developing the entrepreneurial process. In doing so they will
also gain the tools and knowledge that is required to start-up a new
organisation (Mitchell 2006).
2.4 Types of entrepreneurs
Henderson (2002) stated that entrepreneurs belong to a different and unique
group of people. He further went on to say that it is safe to assume the risk of
the company that they own and reap the rewards of their success, as well as
bear the consequences of their failure. A further view has been brought forward
by Kirzner (year), cited in De Jong (2011:2). This particular view of an
entrepreneur states he/she is an arbitrager and by being passively alert is
constantly in a position to see opportunities that others do not. Due to specific
and unevenly distributed prior knowledge, they exploit current market
imperfections that they perceive exist in the market and through price
adjustments bring the system back into equilibrium.
There are two types of entrepreneurs, said Henderson (2002), lifestyle
entrepreneurs and high growth entrepreneurs. Each one of these has different
traits.
Lifestyle entrepreneurs are the type of entrepreneur that start new firms from
scratch for the purpose of supporting a family and a lifestyle by means of
income. The lifestyle entrepreneurs do not like to be held to a schedule and
thrive under the freedom of being able to live a glamorise life, even at the
sacrifice of potential growth for the firm. The lifestyle entrepreneur tends to
contribute the most to the community around them by increasing the quality of
life of the people in these communities (Henderson, 2002).
The next type of entrepreneur that Henderson talked about is the high growth
entrepreneur. The major difference between the lifestyle entrepreneur and the
high growth entrepreneur is that the high growth entrepreneurs are more
motivated to start up and grow larger organisations that can generate more
value. This forces the high growth entrepreneurs to constantly be on the lookout
for the resources that are required to fuel the growth and expansion of their
13
organisation. Stam and van Stel (2011), however, showed that high growth
entrepreneurs only benefit economies that are rich enough to provide resources
to support these kinds of entrepreneurs. High growth entrepreneurs tend to
focus primarily on GDP growth and not on general entrepreneurship. The next
step for the high growth entrepreneur is to take the company public once they
feel they have accomplished some form of success (Henderson, 2002).
Community leaders feel that the high growth entrepreneurs contribute more to
the community because they not only generate more jobs, but they also create
higher income for some, create a larger tax base for their communities, and
tend to reinvest back into the community by means of schools, community
service and philanthropy.
“When benefits like these outweigh the cost of supporting high-growth
entrepreneurs, fostering more high-growth entrepreneurs is viewed as a
sound strategy for adding economic value to communities” (Henderson,
2002:49).
Minniti and Lévesque (2010) discussed two other types of entrepreneurs,
namely:
i.
Research based entrepreneurs. These entrepreneurs incur all types of
expenditure such as R&D and the cost of commercialising different
technologies that they have discovered.
ii.
Imitative entrepreneurs. These entrepreneurs do not like incurring the
costs upfront like the research entrepreneurs, and are not as willing to
get involved in the discovery of new technologies.
Fossen and Buttner (2012) referred to a different set of entrepreneurs, the first
being an opportunity entrepreneur, who are drawn into the entrepreneurial
world because of a favourable situation or prospect.
The second type of entrepreneur the literature refers to is a necessity
entrepreneur. These entrepreneurs are pushed into self-employment as they do
14
not find regular and stable employment. There has been evidence to show that
opportunity entrepreneurs tend to be more successful than necessity
entrepreneurs.
Verheul, Thurik, Hessels and van der Zwan (2010) agreed on the two types of
entrepreneurs and have discovered four major differences between the
opportunity entrepreneur and the necessity entrepreneur:
i.
Socio economic characteristics, like education levels, current age of the
entrepreneurs and their experience.
ii.
Motivation for the start-up may be different. This may have an impact on
the way the business is run, for example a business that is started purely
so the entrepreneur can earn more than he would at a job will behave
differently to an entrepreneur who started a business so he could spend
more time at home and take care of more family-orientated
responsibilities.
iii.
In the entrepreneurship cycle the opportunity entrepreneur tends to lead
the cycle by two years, whereas the necessity entrepreneurship only
leads the cycle by one year.
iv.
The last factor that differentiates these two entrepreneurs is the policy
making process, as some economic policies may benefit the one type of
entrepreneur with absolutely no gain to the other.
The transnational entrepreneur
This entrepreneur is defined as an immigrant business owner who has business
linkages to their home country (Tan, 2008). These types of entrepreneurs have
also been described as self employed immigrants “who depend their success of
their firms on their contacts and associates in another country, primarily their
country of origin” (Tan, 2008:2).
Transnational entrepreneurs are affected by macro economic factors such as:
•
Globalisation
15
•
Immigration
•
Policies in their host countries
•
Socio economic development in their home country
“Transnational entrepreneurship has become an increasingly influential
vehicle of business globalization and an important source of new ideas in
organization theory” (Drori, Honig & Ginsberg, 2009:1).
This continues to show how influential entrepreneurs are on globalisation and
economic growth, and as the literature shows, how important entrepreneurship
is to economic growth, particularly transnational entrepreneurship. Drori et al.,
(2009) described transnational entrepreneurship as a couplet of interlocking
networks of social relationships in which practices, ideas and resources are
unequally transformed, organised and exchanged.
The social relationships referred to above are elements such as resources,
institutions and different structures that are the base of the playing field in which
these transnational entrepreneurs operate.
In this context the authors provide a formal definition of transnational
entrepreneurship (TE): “social actors who utilize multiple and tangible crossborder networks to promote their entrepreneurial activities for the purpose of
developing business opportunities within numerous social fields” (Drori et al.,
2009:7).
TE’s businesses may vary in scope, type, and size. Consequently they are
placed in different categories:
•
Circuit enterprises
•
Ethnic enterprises
•
Return migrant enterprises
•
Cultural enterprises
16
•
Elite expansion enterprises
These different types of enterprises all require specific skills, knowledge,
expertise, attitudes and degrees of embeddedness in the host country, which
will influence the types of business strategies that entrepreneurs employ. Drori
et al. showed that there are two market entry strategies that transnational
entrepreneurs may use:
•
From Above
•
From Below
The “above” strategy aims to stimulate economic growth. Some countries
provide non-quota immigration priority to those entrepreneurs who invest and
start businesses in that country. This has become a very sought after method of
doing business in the host country , which builds immigrant populations that are
primarily composed of state prioritised entrepreneurs due to their business skills
and financial capital. This tends to occur more often when states create
attractive environments for these entrepreneurs, such as tax incentives.
The “below” strategy is when these entrepreneurs enter into a country as an
economic immigrant. These entrepreneurs aim to start businesses through
social capital and use networks to allow them to take advantage of
opportunities in their new home country.
Transnational entrepreneurs tend to get involved in cross-national practices in
order to enable them to take part in the local social capital networks. This has
an influence on the TEs and becomes a significant element of their personal
history (Drori et al.). This is seen in Chinese and Korean communities as well.
The Jewish nation has very strong family ties and a close social network, thus
Jewish entrepreneurs in South Africa fall in the transnational entrepreneurship
category.
17
2.5 Defining success
The construct ‘business success’ has been researched extensively by
Astrachan and Kolenko (1994); Yeung, Tung and Rosalie (1996); Neely, Adams
and Kennerley (2002); and Headd (2003).
Tarricine and Luca (2002:54) have stated that business success specifically
means profit generation. Profit generation does not just imply employees
generating cash flow and contacts for the business, but also includes the ability
of employees to create and maintain a positive working relationship with
colleagues, clients and subordinates.
However, Beaver (2002) commented that success can often be viewed in terms
of growth and profitability, but that it becomes more complicated when trying to
determine the factors that contribute towards it. Johnson (2010) confirmed that
one way of defining success is to judge the extent to which needs of
stakeholders are met. The entrepreneur identifies the opportunity then takes
advantage of that opportunity in such a way that it will meet the demands of
their stakeholders. This needs to be done in order to continue down the path of
entrepreneurship. The author further stated that innovation is critical by the
founding entrepreneurial team in order to achieve success. The unique
combination of ideas and skill brought together through innovation is vital to
achieve success.
Chivukula, Raman and Ramabachandra (2009) applied two metrics in an
attempt to define business success. The first was ‘financial measure’ and the
second, ‘non-financial measures’. The authors continued to report on
entrepreneurial attributes and success where specific criteria were used to
measure the financial success of a company. The increase or decrease in
turnover and the growth in unemployment were the two metrics used to
measure the financial success of the company. The non-financial metrics were
more personal and about whether the entrepreneur liked his/her work
experience and the amount of time the entrepreneur spent running the
business. These non-financial measures were used as support by the
entrepreneur to back up the financial measures.
18
Walker and Brown (2004) implied that from the birth of the company it might not
have been the entrepreneur’s intention to employ other staff and grow the
organisation, but to rather keep it to himself and his immediate family. The
authors added to a possible list of non-financial measures to determine
success, namely self-satisfaction job satisfaction, independence and taking on
challenges that one has set for himself, which are much harder to quantify than
financial measures.
The environment in which businesses operate is another key factor that has an
impact on the growth of an organisation. The business environment can be
defined as all the variables inside and outside the company that may influence
the existence and continuation of the organisation (Olawale & Garwe, 2010).
There are two different environments, one being the internal environment and
the second being the external environment. The internal environment (which is
controlled by the business) is made up of factors such as finance, investment,
technology, managerial competency, and cost of production. The external
environment is made up of factors like informational frameworks, the
macroeconomic and microeconomic environment, social factors, technology
and the regulatory environment.
When analysing a specific group of people it is almost impossible to complete
this study without understanding the culture that the study group belongs to.
This element of the study is crucial to the understanding of the text and the
findings from this study.
2.6 Culture
Hofstede defined culture as “the collective programming of the mind that
distinguishes the members of one group or category from another” (Chrisma,
Chau & Steir, 2002:114).
Therefore one may state that entrepreneurial behaviour is directly influenced by
the cultural attributes of the entrepreneurs. The Jewish nation has unique
cultural elements defined by the nation’s shared history, therefore by gaining a
greater insight of the relationship between culture and entrepreneurship one is
19
able to gain a more insightful understanding of the activities that take place
(Arewa, 2008).
The relationship between culture ans entrepreneurship is of a complex and
myriad nature. (Arewa, 2008).
Arewa talks about two relationships between culture and entrepreneurship. The
first one is the “pervasive global presence of entrepreneurial cultural groups for
whom entrepreneurship may derive from and be closely tied to existing cultural
identities, relationships and networks” (Arewa, 2008:2). These kinds of groups
are primarily visible in the diaspora and in immigrant nations, which also leads
to tension and violence on many occasions. These groups use cultural
identities and similarities to arrange entrepreneurial activities.
The second relationship is “evident in situations where entrepreneurial activities
serve
as
an
organizing
basis
for
the
development
of
cultures
in
entrepreneurship. This pattern has become particularly prominent today as
various regions, governments seek to replicate the success of prominent
entrepreneurial regions such as Silicon Valley” (Arewa, 2008:3).
Through this we can clearly see the relationship between culture and
entrepreneurship.
Arewa (2008:5) defined culture as the spinning of a web that creates a shared
significance among the humans that are suspended from it. These cultural
webs of significance encompass the shared values, beliefs and norms that
characterise the specific culture of that web and the people hanging from it.
However Taras, Rowney and Steel (2009) described culture as an element that
is common to specific set of individuals that are part of a stable society or group
which has been in existence for a very long time.
As this study is based on Jewish entrepreneurs’ culture, values will play a major
role in giving a greater understanding of the group under study. The similarities
of the Jewish peoples’ actions, mind-sets and behaviours are all influenced by
their culture. This culture unifies a group of people but may also segregate or
isolate them.
20
Hofstede categorised culture into five different dimensions which he discovered
by means of surveys.
The five dimensions, according to Venaik and Brewer (2010), are:
i. Power distance - there are multiple solutions to basic human problems
and inequality
ii. Uncertainty avoidance - societal stress felt by a community looking at the
unknown future
iii. Individualism vs. collectivism – individual’s integration into primary
groups
iv. Masculinity vs. femininity – the emotional difference between men and
women
v. Long-term vs. short-term orientation - present and future focus of
people’s efforts.
According to Yeganeh, Su and Sauers (2009:12), Trompenaar had his own
dimensions of culture. They are shown as follows:
•
Universalism vs. particularism – universalism is a belief that what is good
and true can be discovered and applied universally, whereas
particularism is a belief that unique circumstances are the determinant.
•
Neutral vs. Affective – This orientation relates to the importance of
reason and emotion of people. In neutral cultures people control their
feelings and emotions among people, whereas in affective cultures
people tend to be demonstrative.
•
Achievement vs. ascription - some cultures will attach more importance
to achievement than others, which would consider issues such as age,
social class, gender and education.
•
Specific vs. diffuse – these cultures are contrasted in their attitude to
space and communication. In specific cultures people separate their
21
private lives from their public, compared to diffuse cultures where they
may overlap.
•
Individualism vs. collectivism – individualism and collectivism are related
to the extent to which importance is given to the individual versus the
group interests.
Schwartz (2006:143) described the six features of values:
•
Values are beliefs that are linked completely to their effect.
•
Values refer to desirable goals that motivate action.
•
Values transcend specific actions and situations, e.g. obedience and
honesty are values that are relevant at work, school, sport, business,
and politics, and with family, friends, or strangers. This feature
distinguishes values from narrower concepts like norms and attitudes
that usually refer to specific actions, objects, or situations.
•
Values serve as standards or criteria that guide the selection or
evaluation of actions, policies, people, and events.
•
Values are ordered by importance relative to one another to form a
system of priorities. This hierarchical feature also distinguishes values
from norms and attitudes.
•
The relative importance of values guides action. The trade-off among
relevant, competing values is what guides attitudes and behaviours.
As cultural values play a major role in shaping the way people live and the way
people react and behave to specific situations, culture is a crucial element that
is not to be overlooked when discussing an ethnic group such as the Jewish
people in South Africa. Therefore it is only necessary to discuss ethnic
entrepreneurship and the cultural values of that specific group in order to give a
better understanding of how these entrepreneurs came about and how they
operate.
22
2.7 The ethnic entrepreneur
The ethnic entrepreneur is an entrepreneur who does not represent the majority
of the population of the country that he/she is doing business in (Mavoothu,
2009). There is a further benefit bought to the community, society, region and
globe from these minority/ethnic entrepreneurs. In relation to this study it is
evident that the Jewish people are not the majority population in South Africa.
Dana (2007) defined ethnic entrepreneurship as a set of regular patterns which
enable connections to be made, and the interaction among a specific people
who share these common traits and have a background of migration
experience.
As this is a broad term the individuals who are involved in this type of
entrepreneurship generally belong to an ethnic group, which according to Dana
(2007:30) is a “segment of a larger society who’s members are thought to have
a common origin and to share the important segments of a common culture and
participate in specific activities in which a common culture is a significant
ingredient”.
Rewa (2008) went on to show that in certain ethnic groups entrepreneurship is
a cultural norm and may hold a higher value in some ethnic groups than in
others. The characteristics of these ethnic entrepreneurs are wanted by most
entrepreneurs (Mavoothu, 2009).
Fuller-Love, Lim and Akehurst (2006) have shown that ethnic and minority
entrepreneurs face challenges of having very limited access to resources like
finance, labour, markets, and language. They went on to mention that ethnic
entrepreneurs generally rely on their own social groups’ capital and rely on
members within their community to help them. This shows how ethnic
entrepreneurs help each other out and generally stick to one specific industry
where they have power numbers (Assudani, 2009).
Dana (2007) confirmed some of the major issues that these entrepreneurs will
face include the inability to gather information, find capital and skilled labour.
There is also the challenge of being able to provide adequate training for staff
and themselves. The next challenge the author elaborated on was the issues
23
that these ethnic entrepreneurs face dealing with customer and suppliers, being
able to handle and beat the competition and the risk of any political instability in
the new host country. The types of challenges that these ethnic entrepreneurs
face unifies them with their co-ethnic group and develops the ties between
them. On the contrary, Arewa (2008) showed that ethnic entrepreneurs are able
to access resources more easily due to networks and kinship within their
communities.
When ethnic businesses are started the entrepreneurs tend to draw on coethnics to help them start out. That is a difficult process as these ties need to be
made and earned - they are not just given out. Through this process ethnic ties
are developed and small communities are developed into ethnic groups (Salaff,
2003). These ethnic ties give the entrepreneurs a sense of belonging - they
show characteristics that are similar to the representative group. Dress code,
food and customs generally classify someone as a ‘belonger’. Belongers
generally come from the same or similar place (geographic location) at a similar
period in time. They may, and most probably will, share the same language and
religion (Salaff, 2003).
Jewish people in South Africa are an ethnic minority and many of them are
entrepreneurs. Valdez (2003) described ethnic entrepreneurship as business
ownership typically owned by immigrants and ethnic group members.
The Jewish people in South Africa can therefore be classified as an ethnic
group. According to the census of 2011, there are approximately 75 550 Jews
in South Africa. The first ethnic groups that were founded by Jews in South
Africa were the Anglo-German Jews in the mid-nineteenth century (Shain,
2011).
Furthermore there was a strong foundation of Jews that had the same heritage,
which as previously explained, leads to the formation of ethnic groups and ties.
These Jews were known as Litvaks, who were from Eastern Europe and settled
in South Africa in the mid-1900s (Shain, 2011). However, Shain went on to
state that the Anglo-German Jews settled in the Cape in 1806. The Litvaks
where thus classified as the newcomers.
24
For the purpose of this study, going forward more information about the Jewish
entrepreneurs of South Africa will be gathered through the surveys that will be
explained in the methodology, as there was very little academic information
provided to further this particular study.
2.8 Conclusion
Throughout this chapter many different elements have been discussed, starting
with the fundamentals and basis of entrepreneurship, what it is and how it has
evolved, and all the different interpretations of the meaning. Building on this
base the author has provided a good feeling for the types of entrepreneurs and
how each style has its own attributes. The chapter then looked at the South
African context and provided an in-depth understanding as to how
entrepreneurship contributes to economic growth and the current level of
entrepreneurship, by providing the TEA results and the impact the World Cup
had on South Africa’s economy. The author used success as a measurement
for the purpose of this study. The definitions and elements of success were
described and expanded to generate an understanding of how the
entrepreneurs will be measured. Narrowing the study down by defining culture
and ethnic groups enables one to get an overview of the people under view
while building on one of the major constructs of this study. Jewish
entrepreneurs are the subject of review and how their behaviours are based on
their cultural values and norms influence their ability to be successful. The
Jewish nation’s ethnic community and how its co-ethnic counterparts are a
major contributor to the success of ethnic groups provides insight into the
perceived success of the Litvak Nation.
The following chapter will discuss the propositions/hypotheses that the study
aims to prove or reject and how each one will be measured. It will then go on to
the research itself and the methods and techniques used to gather and
evaluate information.
25
Chapter 3: Research Propositions
3.1 Introduction
The literature review has discovered that there are many different types of
entrepreneurship and many ways that enable the reader to gain a better
understanding of success and culture and how all these different constructs
have an impact on a particular social or cultural group. The following four
research questions were tested in order to gain insight into the research
questions of this study. Through this the author will enlighten the reader on
what the causes are that enable the Jewish entrepreneurs to be deemed so
successful.
When defining success for the purpose of this study it will be broken down into
two variables.
•
Growth - this is measured in the increase or decrease of employes from
the formation of the company up to its current position.
•
Turnover - if an organisation has a turnover greater than R2,000,000 it
will be classified as successful for the purpose of this study.
3.2 Research Questions
1. What demographic characteristics are evident in the successful Jewish
entrepreneurs in South Africa?
2. How has the Jewish community enabled/helped the success of Jewish
businesses in South Africa?
3. What are the key elements of focus within a successful Jewish-owned
business?
4. What diverse factors contribute to the success of Jewish entrepreneurs?
26
Research Question 1
What
demographic
charateristics
are
evident
in
successful
Jewish
entrepreneurs in South Africa?
The author will test this research by discovering which of the successful
entrepreneurs have used external financing from financial institutions and which
used their own capital or borrowed it from family and friends. The author will
also analyse the level of education of the entrepreneur as well as the gender
and age of the entrepreneurs.
Research Question 2
How has the Jewish community enabled/helped the success of Jewish
entrepreneurs in South Africa?
This will be analysed by analysing how many of the entrepreneurs have family
involved in their organisation and how dependent they are on these people in
order to keep the organisation alive.
Research Question 3
What are the key elements of focus within a successful Jewish owned
business?
This will be explored by analysing if there is a direct correlation between the
level of education and the success of the entrepreneurs. Then it will be seen if
the number of hours that the entrepreneurs work are a direct link to growth
(factor of success) and the amount of business experience the entrepreneur
has.
27
Research Question 4
What diverse factors contribute to the success of Jewish entrepreneurs?
This question will be evaluated based on the amount of time the entrepreneur
spends in different areas of the business. The author will elaborate on the key
elements, ranging from hours spent at work, to getting more specifically into
how many hours are spent on managing people, financial issues, operational
issues and marketing and sales issues. All these factors play a major role in the
success of business.
28
Chapter 4: Research Methodology
This chapter explains the route the researcher took in order to collect and
analyse information to test the research propositions of the study and likewise
answer the research questions. The information was gathered through
questionnaires
which
were
hand-delivered
and
e-mailed
to
Jewish
entrepreneurs. For the purpose of this analysis, a non-probability sample was
used in order to collect the primary data required. This allowed the author to
have control over what elements may or may not be included in the sample at
hand. The sample was taken from successful Jewish entrepreneurs in South
Africa. The questionnaire’s validity and reliability was tested using the
Cronbach’s Alpha study. A total of 50 questionnaires were sent out; of the 50
there was a response rate of 64%, i.e. 32 responses were available for use.
4.1 Research design
For the purpose and format of this proposal the research design that was
applied to test the propositions of this study were quantitative in nature.
Malhotra (2010) went on to define quantitative research as a methodology that
seeks to quantify the data collected for a statistical analysis. The author
elaborated that quantitative research is used over a large number of
representative cases and is a structured method of data collection used in a
statistical way. Saunders, Lewis and Thornhill (2009) explained that quantitative
research is used for any data (such as a questionnaire) analysis procedure that
generates the use of numerical data. Tharenou, Donohue and Cooper (2007)
defined quantitative data as information that is a set of measured and observed
variables.
This research design was exploratory in nature with a descriptive nature. The
researcher was examining a problem or situation in order to gain a better
insight and a better understanding of it (Malhotra, 2010). Saunders et al.
(2009:140) provided information that said that exploratory research is useful
when clarity on a specific problem is needed, and have developed three ways
of conducting exploratory research:
1. Search of the literature
29
2. Interviewing ‘experts’ in the subject
3. Conducting focus group interviews
Exploratory research can be defined as the initial research that is done in order
to clarify and give definition to a problem (Zikmund, 2003). The author
promoted the thought that exploratory research is done even though the
researcher is aware that further research will be required in order obtain definite
evidence.
Primary data is data that has been collected specifically for the research
problem at hand (Malhotra, 2010). This data was collected by the researcher by
means of a questionnaire. Malhotra (2010) went on to further explain what
exploratory research could be used for:
1. Formulate a problem or define a problem more precisely
2. Identify alternative courses of action
3. Develop hypothesis
4. Isolate key variables and relationships for further examination
5. Gain insights for developing an approach to the problem
6. Establish priorities for further research
4.2 Sampling method
The purpose of using a sampling method is to gather the most accurate
information about the population at hand. Malhotra (2010:371) stated that a
sample is “a subgroup of the element of the population selected for participation
in the study.” He went on to state that a population is a specific subset of the
universe in which the research problem lies, all sharing specific criteria that
characterises the universe in which they belong.
A non-probability sampling technique was used so that the researcher had
control over what elements may be included in the sample. This method of
sampling was used as it was difficult to determine the number of successful
Jewish entrepreneurs in the region of the study. Throughout South Africa there
30
is a wide spread of Jewish people, however there are many successful
entrepreneurs in the Gauteng region. The initial sample of the entrepreneurs
that were surveyed were identified through convenience sampling.
Convenience sampling, according to Malhotra (2010), is a non-probability
sampling technique that attempts to obtain a sample of convenience elements.
The interviewer is left with the decision of whom he wants to interview.
Saunders et al. (2009) stated that convenience sampling involves selecting
those cases that are the easiest to obtain. Furthermore, Saunders et al. (2009)
elaborated that this type of sampling is prone to bias as the cases only appear
in the study due to the ease of collection.
The next technique that was used was Snowball sampling, which is used when
it is difficult to gather or identify candidates of the desired population.
There is a method of doing this technique (2009:240):
1. Make contact with one or two cases in the population
2. Ask these cases to identify further cases
3. Ask the new cases to identify further new cases (and so on)
4. Stop when either no new cases are given or the sample is as large as is
manageable.
The main problem here is to make the initial contact - once this is done all the
cases (entrepreneurs in this instance) will relay the researcher on to more
entrepreneurs and so the snowball effect takes place.
Malhotra (2010) explained this non-probability sampling technique where the
first group of respondents is selected randomly and then they provide the
interviewer with referrals of more candidates to add to the sample. This process
may continue throughout all your referrals and this process can be done in
sections or intervals.
In this study a sample size of 30-35 successful Jewish entrepreneurs were
acquired to take part in the survey by means of the methods mention above.
31
A sample of 30-35 successful Jewish entrepreneurs was chosen to take part in
this survey. The secondary research component of this study informed the
sample selection pertaining to the criteria to be applied in selecting successful
entrepreneurs. Based on a previous study of successful entrepreneurs,
Govindasamy (2010) used the following two contracts that formed the criteria of
the selection process.
The two criteria are success factors and successful
businesses. The success factors are divided into categories as follows:
•
General management and business skills
1. Hours worked per day
2. Time spent on managerial functions per day
3. Importance of business skills
4. Market parameters in which the business operated
5. Knowledge of what customers want
•
Personal Factors
1. Education
2. Number of years business has existed
3. Number of prior businesses started
4. Entrepreneurial orientation
5. Motivational factors
6. Network of family and friends that are self-employed
7. Involvement of family and friends in managing the business
8. Reliance on family members to help run the business
9. Following in the family tradition in the nature of the business
In order to group the sample into successful and unsuccessful categories, the
researcher use two measures:
32
1. Turnover
2. Growth
•
Finance and ownership of start-ups
1. Where did the business originate?
2. How was the company funded?
3. Where would the business like to be in X amount of years?
4.3 Sample size
There must be 30 people or more in the survey, said Malhotra (2010), where
n=30 or more it can be approximated by the normal distribution. A normal
distribution is a statistical interface with a bell shaped appearance that is
symmetrical. This implies that by interviewing 30 people or more the results will
be a direct reflection of the entire population
4.4 Unit of analysis
The unit of analysis that was researched were the successful Jewish
entrepreneur in the South African region. According to Tharenou et al. (2007), a
unit of analysis can be divided into many different criteria for analysis:
1. Individuals - each person’s response will taken as a separate source of
information.
2. Dyads - the interaction of two people, for example a supervisor and a
subordinate.
3. Groups - teams become the unit of analysis.
4. Organisations – the entire company becomes the single unit of analysis.
5. Industries - the unit is measured across specific industries, not
companies or people.
For the purpose of this study the unit of analysis was individuals, specifically the
successful Jewish entrepreneur in South Africa.
33
4.5 Population of relevance
The population of relevance consisted of Jewish entrepreneurs in South Africa.
This population is approximately 75 555 people, according to the government
information website. This was last updated in accordance with the 2011 census
(South African Government, 2011). Saunders et al. (2009) defined a population
as the entire set of cases from where the sample may be drawn or selected
from.
4.6 Data collection process
The data was collected via a survey developed by the researcher, which was
tailored for this specific topic.
The survey is a popular way of gathering
information on the “who”, “what”, “where” and the “how”, which shows that this
specific method is useful for exploratory research.
The benefits with using a survey is that they collect lots of information for the
sample or population in a very economical way. The survey method is easy to
explain to the sample at hand and is easily understood by them.
Surveys are “interviews with a large number of respondents using a
predesigned questionnaire” (Malhotra, 2010:145). The survey type used for this
specific research was structured. This means that there was a pre-set, formal
questionnaire in place that was asked in a prearranged manner, therefore the
process was also direct. Malhotra (2009) further elaborated on some
advantages and disadvantages of the survey method:
Advantages
1. The questionnaire is simple to administer.
2. The data that is collected from the surveys are reliable as the
respondents are limited to the number of alternatives they can provide.
3. As all the questions are of a fixed response state they limit the variability
in the results.
4. The data is easy and simple to code, sort and gather.
Disadvantages
34
1. The respondents might not be willing to provide the information required
or they might not be able to provide the right answer due to the
limitations of the survey.
2. Some respondents might not be willing to provide personal information.
3. Due to the nature of the survey with its fixed structure it may lose validity
as it does not take into account the emotions and feelings of the
respondents.
4. There could be some difficulty in wording the questionnaires.
The first step of collecting the data was to select successful Jewish
entrepreneurs based on the following success criteria. As described by
Chivuka, Raman and Ramachandra (2009), success can be defined either
through financial or non-financial measures, however more often than not the
financial measures are used in measuring success. This was the initial step in
gathering data as there was a good relationship between the researcher and
the selected entrepreneurs.
Once they had completed the surveys the snowball effect was used in order to
generate more interest in the survey and to gain access to more of the
population.
The
researcher
personally
delivered
the
surveys
to
the
entrepreneurs as it showed good faith and allowed the researcher to meet
these successful entrepreneurs and build relationships with them. This was a
tool used to build a network for the researcher and was a perfect icebreaker
and opportunity to gain access to entrepreneurs of this calibre.
35
4.7 Statistical analysis
The type of statistical analysis that was applied to process the data was
descriptive in nature. According to Saunders et al. (2009), descriptive statistics
provide the author with the information in a numerical way, allowing different
variables to be compared with one another. Descriptive statistics are used to
analyse and describe the characteristics of what the set or the individual data
represents (Salkind, 2009). Saunders et al. (2009) went on to say that when
statistics are used to describe a variable, they focus on two aspects:
1. Central Tendency
This gives a general impression of values which come across as
common, middling or average. There are three ways to measure
the central tendency.
•
Mode - these are the values that will appear the most in the data set
•
Median - this will be the mid-point of the data set once the ranking
process has taken place
•
Mean - this is the average of all the data gathered
The mode is generally used when the data that is being analysed are
categorical in nature, and all the values can fit into one class.
The median is of use when dealing with extremely high figures and the
researcher does not want to distort any of them.
Finally, when a test is done and the scores are not extremely high and they
do not fall into specific categories, the mean is used
2. Dispersion
This shows how the data has been dispersed around the central
tendency.
There are two ways to describe the dispersion:
36
•
Inner quartile range - this is the difference in the middle 50% of the
values that are used in the data set
•
Standard deviation - this shows how far each unit of data is from the
mean (average)
When using the central tendency and the dispersion options that have been
defined and discussed above to analyse the data, the researcher was able to
see what factors contributed the most to make these entrepreneurs so
successful and how the other factors did not affect the entrepreneurs. By using
these two types of measures the researcher gained a clear understanding of
the success factors of the population under study.
From this the researcher was able to draw a conclusion based on statistical
evidence and use it to either confirm or deny the belief, stories and the
proposed propositions. The elements and calculations used for descriptive
statistics is a group of statistical equations and tests that are performed on the
data in order to generate useful information (Salkind, 2007).
Some tests that fall under the descriptive statistics:
•
Anova - This compares the actual variation of the group to the expected
outcome that is required
•
Correlation – How two types of results or independent variables move in
relation to one another
•
Histogram – This is the graphical representation in a vertical fashion
representing the data
•
Moving average – They are used to identify a pattern in a moving trend
•
Z-Test - This is where a normal distribution is applied and when one is
dealing with large samples n> 30
•
T-test – This assesses the statistical means of two groups and if they
are different or not
37
4.8 Reliability
The reliability of the questionnaire was tested via the use of Cronbach’s Alpha.
Cronbach’s Alpha was evaluated for the items in the scale used for
questions 25, 26, 27 and 28, which used Likert scales.
For question 25
Reliability Statistics
Cronbach's Alpha
N of Items
.650
6
Item-Total Statistics
Scale
Mean
Item
Variance
Corrected
if Item-Total
Cronbach's
Alpha if Item
Deleted
10.21
11.434
.449
.579
10.86
12.571
.296
.641
in 11.46
11.665
.472
.571
12.597
.359
.614
Increase size of
existing business
Increase
employment
up
Scale
Item Deleted Correlation
Deleted
Set
if
another
business
different industry
Acquire
other
businesses
in 11.18
same industry
38
Merge with other
businesses
Sell business
11.50
12.630
.414
.596
11.39
13.433
.296
.634
A high internal reliability is seen for the variables that describe the future plans
for the business as the respondents indicated. The Cronbach’s alpha is 0.65.
Question 26
The Cronbach’s Alpha for personal characteristics in shown in the table below:
Reliability Statistics
Cronbach's Alpha
N of Items
.588
9
Item-Total Statistics
Scale
Mean
Item
achievement
Don’t give up
easily
Like
a
challenge
Optimistic
Like to work on
own
Scale
Variance
Corrected
if Item-Total
Cronbach's
Alpha if Item
Item Deleted
Correlation
Deleted
28.34
19.734
.068
.597
28.14
19.480
.124
.590
28.38
18.172
.290
.563
28.52
16.330
.496
.513
29.41
15.823
.239
.579
Deleted
High level of
if
39
Quick to make
a decision
Like
to
take
high risks
Like
to
take
medium risks
Like
to
take
low risks
29.10
13.382
.572
.453
30.45
14.542
.566
.472
29.59
15.751
.287
.559
29.86
18.409
.003
.656
The Cronbach’s Alpha value was 0.588 which is low, but if the item “Like to take
low risks” is removed, the Cronbach’s Alpha value would increase to 0.656. The
variable was removed and the Cronbach’s Alpha rerun, and the results are
shown below:
Reliability Statistics
Cronbach's Alpha
N of Items
.656
8
Item-Total Statistics
Scale
Scale
Mean
if Variance
Item
Corrected
if Item-Total
Cronbach's
Alpha if Item
Item Deleted
Correlation
Deleted
17.616
.133
.664
17.135
.246
.650
Deleted
High level of 25.48
achievement
Don’t give up 25.28
40
easily
a 25.52
16.401
.287
.641
25.66
14.448
.529
.588
Like to work on 26.55
13.470
.307
.649
11.904
.562
.555
take 27.59
12.823
.583
.557
take 26.72
14.493
.236
.666
Like
challenge
Optimistic
own
Quick to make 26.24
a decision
Like
to
high risks
Like
to
medium risks
Thus, there was a high level of internal reliability.
Question 27
The Cronbach’s Alpha for motivation to start a business is shown in the table
below:
Reliability Statistics
Cronbach's Alpha
N of Items
.317
11
Item-Total Statistics
Scale
Mean
Item
Scale
Corrected
if Variance if Item-Total
Correlation
Item
Cronbach's
Alpha if Item
Deleted
41
Deleted
Wanted
Deleted
greater
freedom to adopt own 27.71
17.323
.182
.263
29.96
19.147
.075
.310
27.57
18.402
.138
.286
than 27.61
16.544
.283
.216
30.21
20.619
-.037
.333
27.82
18.893
.071
.312
28.89
20.988
-.179
.445
previous experience/ 29.89
18.544
.126
.291
18.053
.104
.300
15.295
.450
.137
17.772
.087
.310
approach to work
Had been out of work
for a period of time
Always wanted to be
my own boss
Wanted
more
to
make
money
was earning before
Had
been
made
redundant
Wanted to challenge
myself
Was dissatisfied with
previous job
Wanted
to
develop
hobby into a business
Wanted to follow the
example of someone 29.14
I admired
Thought I would get
more respect working 28.54
for myself
Wanted to continue a 29.07
42
family tradition
The Cronbach’s Alpha value of 0.317 was low, but if the item “Was dissatisfied
with previous job” is removed, the Cronbach’s Alpha value would increase to
0.445. The variable was not removed because the Cronbach’s Alpha would still
be small. Thus, there was no internal consistency on the scale for motivation.
Question 28
The Cronbach’s Alpha for importance of business skills is shown in the table
below:
Reliability Statistics
Cronbach's Alpha
N of Items
.767
7
Item-Total Statistics
Scale
Mean
Scale
Corrected
if Variance if Item-Total
Cronbach's
Alpha if Item
Correlation
Deleted
13.592
.457
.748
13.306
.537
.727
13.582
.738
.693
Item
Item
Deleted
Deleted
Business linkages,
industry
clusters 18.17
and networking
Computer
literacy
and access to the 18.27
internet
Financial
management, cash 17.73
flow,
pricing
and
43
costing
Human
resource
18.20
14.441
.465
.743
18.00
15.172
.479
.742
from 18.73
12.961
.651
.701
16.700
.159
.798
management
Quality
management
Role
(learning
models
others)
Good networks with
suppliers
17.70
There is a very high internal reliability with a Cronbach’s Alpha of 0.767 for
items describing the importance of business skills. The removal of the item
“Good networks with suppliers” would result in an increase of the Cronbach’s
Alpha from 0.767 to 0.798. Since the increase was small and the coefficient
was already high, the item was kept in the scale.
44
Chapter 5: Results
5.1 Introduction
This chapter aims to report back the results gathered from the questionnaires
based on the research problem stated and will further go on to answer the
research questions. The descriptive statistics below will show how the
information was analysed and what was drawn out of the information.
5.2 Classification of data
As the literature review showed, the measurement of the success of these
entrepreneurs will be classified into two categories, namely successful and less
successful. The measure of success was based on two elements:
1. Turnover - for the purpose of this study the annual turnover of R2 000
000 was used as an indicator to classify the different companies into
successful and less successful. If a company turned over more than R2
000 000, then it fell into the successful category and vice versa. This was
done so that the entrepreneurs did not have to state the exact turnover
as many would be reluctant to do so.
2. Growth - growth was measured by the increase/decrease in the number
of employees from the companies’ inception birth.
As the statistics will show, 84% of the businessess had an annual turnover of
greater than R2 000 000 and the remaining 16% were less than R2 000 000.
This means that 27 of the 32 companies were classified in the successful group
and five were in the less successful group.
The statistics will further show the growth of the companies in question.
5.3 Demographic Information
The sample consisted of 32 respondents. Of those, 91% were male and the
other 9% were female.
45
Gender of Respondents
9%
Male
91%
Female
Figure 1: Gender of respondents
5.4 Nature of Business Industry
The largest proportion of the respondents (44%) had businesses in the services
industry, followed by 19% in the food industry, 13% in manufacturing, 9% in
hardware, 6% apiece in clothing, agriculture, energy and construction, and the
lowest proportion in the jewelery business.
Percentage of Respondents
Nature of Business Industry
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Business Industry
Figure 2: Nature of business industry
5.5 Age
46
The average age of the interviewed Jewish business people was 45.94 years,
with a standard deviation of 13.83 years. The youngest entrepreneur was 24
years old and the oldest was 85 years old.
Table 2: Age of respondents
Descriptive Statistics
N
Age
31
Minimu
Maximu
m
m
24
85
Mean
Std.
Deviation
45.94
13.83
5.6 Highest Level of Academic Qualification
Respondents were asked about their highest level of academic qualification.
28.1% had matric, 12.5% had diplomas, 31.3% had degrees and the remaining
28.1% had postgraduate degrees.
Percentage of Respondents
Highest Level of Academic Qualification
35
30
25
20
15
10
5
0
Postgraduate
degree
Degree
Diploma
Matric
Education Level
Figure 3: Level of education
5.7 Business age
47
On average, each business has been in existence for 20 years with a standard
deviation of 23 years. The newest business was only a year old and the oldest
has been in existence for 114 years.
Table 3: Age of business
Descriptive Statistics
N
Years
of
existence
32
Minimu
Maximu
m
m
1
114
Mean
Std.
Deviation
20.00
23.12
Half of the respondents stated that the businesses that they currently own were
their first businesses, whilst the others had started other businesses before.
First Business
50%
50%
Yes
No
Figure 4: First business started
Of those who had started other businesses before, they on average started five
businesses with a standard deviation of 7. The lowest number of businesses
started was one and the highest was 30 businesses.
Table 4: Number of businesses started
48
Descriptive Statistics
N
Number
of
other
businesses started
16
Minim
Maxim
Mea
Std.
um
um
n
Deviation
1
30
5.13
7.070
5.8 Employees
A paired sample t-test was carried out to assess whether there is a difference in
the number of employees that the respondents started business with and the
current number of employees. The results are shown below:
Table 5: number of employees
Paired Samples Statistics
Mean
N
Std.
Deviation
Pair
Current
number
1
employees
of
Employees when you
143.90
30
308.421
32.47
30
96.089
started
Paired Samples Test
Paired Differences
Pair
Current
1
employees
number
of
-
Mea
Std.
n
Deviation
111.
224.36
t
df
PValue
2.72
29
0.011
43
Employees when you
started
49
The average number of employees increased from 32 to 144. The t-test for the
difference between the number of employees that the respondents started
business with and the current number of employees resulted in a t-value of 2.72
and a p-value of 0.05. The p-value is less than 0.05 (significance level) and
thus the null hypothesis is rejected and the conclusion reached that there was
an increase in the number of employees.
5.9 How the respondents became owners
Half of the respondents founded their businesses, 31% purchased their
businesses, 9% inherited them, 3% worked in the businesses to gain equity,
3% were approached to become a partners, and another 3% renewed the
businesses. The results are illustrated in the graph below:
Percentage of Respondents
How the Respondents became Owners
60
50
40
30
20
10
0
I founded it I purchased it I inherited it
Worked and Approached
gained equity to become a
partner
Renewed it
Figure 5: How the respondents became owners
5.10 Sources of Capital
Most of the respondents (56%) used their own capital to start their businesses,
34% used loans from commercial banks, 16% used loans from family, 9% used
loans from friends, and 6% used venture capital. The results are summarised in
the graph below:
50
Sources of Capital used in Starting a Business
Percentage of Respondents
60%
50%
40%
30%
20%
10%
0%
Used Own
Capital
Loan from
commercial
bank
Loan from
family members
Loan from
friends
Used venture
Capital
Figure 6: Source of capital used
5.11 Parents owned a business
Most of the Jewish business people (84%) came from families that owned
businesses and the other 16% were from families who did not own businesses.
Parents Owned a Business
16%
Yes
84%
No
Figure 7: Parents who owned a business
Of the 27 respondents who had parents with businesses, 67% had businesses
that were totally different from their parents, 15% had businesses that were
moderately similar to their parents, 4% had businesses that were very similar to
their parents and the remaining 15% had businesses exactly the same as their
parents.
51
Business's similar to Parent's Business
Percentage of Respondents
70
60
50
40
30
20
10
0
Not at all
Moderately
Very
Exactly the same
Figure 8: Business similar to parents
5.12 Family members involved in business
Respondents were asked if their family members were involved in their
business and 34% said yes and the other 66% indicated that their family
members were not involved in their businesses.
Family Members Involved in Business
34%
66%
Yes
No
Figure 9: Family members involved in business
Of those who have family members involved in their businesses, 50% of those
involved are sons, 12.5% daughters, 12.5% brothers-in-law, 12.5% husbands
and another 12.5% fathers-in-law.
52
Who is involved
Percentage of Respondents
60
50
40
30
20
10
0
Son
Daughter
Brother in-law
Husband
Father in-law
Figure 10: Who is involved?
The majority of the respondents (72%) do not depend on family at all to run
their businesses, whilst 9% moderately depend on family, 13% are very
dependent on family and the remaining 6% are extremely dependent on family.
Depend on Family to run the Business
Percentage of Respondents
80,0
70,0
60,0
50,0
40,0
30,0
20,0
10,0
0,0
Not at all
Moderately
dependent
Very dependent
Extremely
dependent
Figure 11: Depend on Family to run the Business
Most of the Jewish business people (87%) have a network of family and friends
that are self-employed and only 13% do not have a network of family and
friends that are self-employed.
53
Network of Family and Friends that are Self-Employed
13%
Yes
No
87%
Figure 12: Networkof family and friends that are self-employed
When asked to discuss the market in which they operate, 38% of the Jewish
business people indicated that they compete with few competitors that are
highly competitive, 31% with many competitors with fixed prices, 3% with many
competitors with varying prices, another 3% with many competitors that are
highly competitive and 3% of the respondents were not sure of the competitors
that they compete with.
Percentage of Respondents
Description of the Market the Businesses Operate in
40
35
30
25
20
15
10
5
0
Few
Many
competitors competitors
that are highly with fixed
competitive
prices
Few
competitors
with variable
prices
Not sure
Many
Many
competitors competitors
with varying that are highly
prices
competitive
Figure 13: Description of the market the business operates in
Half of the respondents work between 11 and 15 hours a day and 9% work
more than 15 hours a day. The pie chart below shows the distribution of
number of hours that the business people work per day:
54
Hours Worked per Day
3%
9%
38%
0 - 5 Hours
5 - 10 hours
50%
11 - 15 Hours
> 15 hours
Figure 14: Hours worked per day
5.13 Time spent on different business activities
The largest proportion of respondents (41%) spend 0-1 hour per day on
financial issues, 34% spend 2-3 hours and 24% spend more than 3 hours on
this activity. The majority of respondents (57%) spend 2-3 hours on
marketing/sales, 17% spend 0-1 hour and 27% spend more than 3 hours on
marketing. Managing people has the highest proportion of respondents
spending more than 3 hours on the activity. The rest of the distribution is shown
in the graph below:
Hours Spend Doing Different Business Activities
Percentage of Respondents
60
50
40
Financial issues
30
Marketing/ Sales
20
Managing People
10
Operational issues
0
0 - 1 hours
2 - 3 hours
>3 hours
Number of Hours per Day
Figure 15: Hours spent on doing different business activities
Table 6: Hours spent on doing different business activities
55
Business Activity
Hours per 0
Day
Financial
Marketing/
Managing
Operational
issues
Sales
People
issues
41%
17%
14%
31%
34%
57%
43%
38%
24%
27%
43%
31%
100%
100%
100%
100%
-
1
hou
rs
2
-
3
hou
rs
>3
hou
rs
Total
5.14 How do you know what customers want?
The results revealed that Jewish business people mainly continuously ask
customers what they want (52% strongly agree) and look at what the sales
show them (50% strongly agree). The results are illustrated in the graph below:
56
Knowledge of What customers Want
Percentage of Respondents
70
60
50
I continuously ask them
40
I put myself in their shoes
30
Not sure
20
I know what they want
10
I look at what the sales show me
0
Strongly
Disagree
Disagree
Agree
Strongly
Agree
Figure 16: Knowledge of what customers want
Table 7: Knowledge of what customers want
I
I put myself in Not
I know what I look at what the
continuou
their shoes
sure
they want
sales show me
26%
23%
60%
24%
23%
0%
0%
20%
24%
9%
22%
41%
20%
24%
18%
52%
36%
0%
29%
50%
100%
100%
100%
100%
sly
ask
them
Strongly
Disagre
e
Disagre
e
Agree
Strongly
Agree
100
%
57
5.15 Annual Turnover
Most of the respondents (74%) have an approximate annual turnover above R5
million rands, followed by 23% with an annual turnover of between R2 million
rands and R5 million rands, and the remaining 3% had annual turnover
between R1 million and R2 million rands. There was no one with a business
that had less than R1 million rand turnover. The results are indicated in the pie
chart below:
Approximate Annual Turnover
3%
23%
R1000 000 - R2000 000
74%
R2000 000 - R5000 000
> R5000 000
Figure 17: Approximate annual turnover
5.16 Value
The majority of the businesses (84%) had an approximate value above R2
million rands, followed by 10% of businesses with values between R1 million
and R2 million, and the remaining 6% of businesses had an approximate value
of less than R1 million rands.
58
Approximate Value
6%
10%
<R1 000 000
R1 000 000 - R2 000 000
84%
> R2 000 000
Figure 18: approximate value of the company
5.17 Financial Assistance in the last 12 months
More than half of the businesses (58%) required external financial assistance to
meet their financial obligations in the last 12 months.
Required External Financial Assistance to meet Financial
Obligations in the last 12 months
42%
58%
Yes
No
Figure 19: External financial assistance required in the last 12 months
5.18 Future plans for the Business
59
Most Jewish business people want to increase the size of their existing
business (57% strongly agree), followed by to increase employment (32%
strongly agree). On the other hand respondents do not want to merge with
other businesses (54% strongly disagree) and they also would not want to set
up another business in different industry (52% strongly disagree). The means
are also shown in the table below:
Future Plans for the Business
Percentage of Respondents
60
Merge with other businesses
50
Set up another business in different
industry
40
Sell business
30
20
Acquire other businesses in same
industry
10
Increase employment
0
Increase size of existing business
Strongly
Disagree
Disagree
Agree
Strongly
Agree
Figure 20: Future plans for the business
Table 8: Future plans for the business
Descriptive Statistics
N
Minimum Maximum Mean Std.
Deviation
Increase
size
of
existing
business
Increase employment
Acquire other businesses in
same industry
Sell business
Set up another business in
different industry
30 1
4
3.07
1.258
28 1
4
2.46
1.232
28 1
4
2.14
1.113
29 1
4
2.00
1.069
29 1
4
1.93
1.193
60
Merge with other businesses
28 1
4
1.82
1.020
5.19 Personal Characteristics
The respondents were asked to rate a list of personal characteristics on a scale
of 1 to 5, where 1 was strongly disagree and 5 was strongly agree. A one
sample t-test was carried out against the midpoint of the scale (3) for each
characteristic. The null hypothesis for each characteristic was that the
respondents neither agree nor disagree with the characteristic (mean of
characteristic = 3) and the alternative hypothesis was that the respondents
either agree or disagree. The tests were thus two-tailed. The results are shown
below:
Table 9: personal characteristics
One-Sample
T- Test against the Midpoint
Statistics
of the scale = 3
N
High
level
of 3
achievement
1
Don’t
give
up 3
easily
Like a challenge
Optimistic
Me
an
4.3
9
4.6
2
3
3
4.3
2
4
3
4.2
2
8
Like to work on 3
3.3
own
4
2
Std.
t
df
P-Value
0.495
15.598
30
0.000
0.492
18.689
31
0.000
0.653
11.641
31
0.000
0.813
8.920
31
0.000
1.335
1.457
31
0.155
Deviatio
n
61
Quick to make a 3
3.6
decision
9
2
Like to take high 3
2.4
risks
7
Like
2
to
take 3
medium risks
0
3.1
7
Like to take low 3
2.9
risks
0
0
1.230
3.163
31
0.003
1.191
-2.523
31
0.017
1.262
0.724
29
0.475
1.348
-0.406
29
0.687
1=Strongly Disagree, 2=Disagree, 3=Unsure, 4=Agree and 5=Strongly
Agree
The respondents agreed with the characteristics “High level of achievement’’
“Don’t give up easily”,
“Like a challenge”, and “Optimistic”. These
characteristics had a mean greater than the mid-point of the scale and a pvalue of the t-test less than 0.05. This implies that the null hypothesis is
rejected in favour of the alternative hypothesis at 5% significance level. The rest
of the characteristics had a p-value greater than 0.05, implying that the
respondents were unsure about those characteristics.
5.20 Motivation to start a business
One sample t-tests were also carried out for motivation to start a business. The
null hypothesis for each factor was that the respondents neither agree nor
disagree with the factor (mean of factor = 3) and the alternative hypothesis was
that the respondents either agree or disagree. The results are shown below:
Table 10: Motivation to start a business
One-Sample Statistics
T- Test against the Midpoint
62
of the scale = 3
N
Me
an
Always wanted to be my 3
4.1
own boss
1
0
3
4.0
0
7
3
4.0
1
0
Wanted to make more
money than was earning
before
Wanted greater freedom
to adopt own approach to
work
Wanted
to
challenge 3
myself
1
3.8
7
Thought I would get more 3
3.0
respect working for myself
0
Was
dissatisfied
with 2
previous job
Wanted
9
to
continue
a 3
family tradition
Wanted
to
follow
the
example of someone I
admired
Wanted
previous
0
to
develop
experience/
hobby into a business
2.7
9
2.6
0
0
2
2.5
9
5
3
1.9
0
0
Had been out of work for 3
1.6
Std.
T
df
P-Value
1.012
6.036
30
0.000
1.172
4.983
29
0.000
1.211
4.597
30
0.000
1.056
4.590
30
0.000
1.203
0.000
29
1.000
1.473
-0.756
28
0.456
1.380
-1.588
29
0.123
1.270
-1.901
28
0.068
1.155
-5.216
29
0.000
0.964
-7.763
29
0.000
Deviati
on
63
a period of time
Had
been
redundant
0
made 2
9
3
1.4
1
0.568
-15.038
28
0.000
The results shows that the respondents agree with “Always wanted to be my
own boss”, “Wanted to make more money than was earning before”, “Wanted
greater freedom to adopt own approach to work”, and “Wanted to challenge
myself” as the motivation factors that inspired them to start businesses. This is
because the factors have a mean rating greater than 3 and p-values of t-test
less than 0.05.
There is no significant difference between the mid-point of the scale and the
mean of the factors “Was dissatisfied with previous job”, “Wanted to continue a
family tradition”, and “Wanted to follow the example of someone I admired”,
because the p-value of the t-test is greater than 0.05 and thus the null
hypothesis cannot be rejected.
On the other hand, the respondents disagreed with “Wanted to develop
previous experience/ hobby into a business”, “Had been out of work for a period
of time”, and “Had been made redundant”, because the factors had a mean
rating less than the mid-point on the scale (3) and p-values less than 0.05.
5.21 Importance of business experience
64
Importance of Business experience
Percentage of Respondents
70,0
Good networks with suppliers
60,0
Financial management, cash flow,
pricing and costing
50,0
Quality management
40,0
30,0
Business linkages, industry clusters
and networking
20,0
Human resource management
10,0
Computer literacy and access to the
internet
0,0
Not at all
Moderately
Very
Role models (learning from others)
Extremely
Figure 21: Importance of business experience
Table 11: Importance of business experience
Good
Financial
Qual Business
Huma
Computer
Role
networ managemen ity
linkages,
n
literacy
models
ks with t, cash flow, man
industry
resour
and
(learnin
suppli
pricing
and age
clusters and ce
access to g
ers
costing
men
networking
manag
the
ement
internet
t
from
others)
N
ot
at
7%
3%
3%
16%
6%
13%
23%
7%
9%
16%
22%
28%
22%
26%
all
M
od
er
at
el
y
65
V
er
23%
31%
50%
16%
31%
28%
39%
63%
56%
31%
47%
34%
38%
13%
y
Ex
tre
m
el
y
5.22 Importance of business skills
Most Jewish business people view managing good networks as a very vital skill
in their businesses (63% of the respondents mentioned that it is extremely
important). This is followed by financial management, cash flow, pricing and
costing (56% mentioned it as extremely important), then business linkages,
industry clusters and networking (47% mentioned it as extremely important).
The least regarded business skill is looking up to role models (learning from
others) because only 13% mentioned it as extremely important and 23%
mentioned it as not important at all. The results are shown in the graph below:
Importance of Business skills
Percentage of Respondents
70,0
Good networks with suppliers
60,0
50,0
Financial management, cash flow,
pricing and costing
40,0
Quality management
30,0
Business linkages, industry clusters
and networking
20,0
Human resource management
10,0
Computer literacy and access to the
internet
0,0
Not at all
Moderately
Very
Extremely
Figure 22: Importance of business skills
Table 12: Importance of business skills
Good
Financial
Qual Business
Huma
Computer
Role
66
networ managemen ity
linkages,
n
literacy
models
ks with t, cash flow, man
industry
resour
and
(learnin
suppli
pricing
and age
clusters and ce
access to g
ers
costing
men
networking
manag
the
ement
internet
t
from
others)
N
ot
at
7%
3%
3%
16%
6%
13%
23%
7%
9%
16%
22%
28%
22%
26%
23%
31%
50%
16%
31%
28%
39%
63%
56%
31%
47%
34%
38%
13%
all
M
od
er
at
el
y
V
er
y
Ex
tre
m
el
y
67
Chapter 6: Discussion of Results
The aim of this study was to determine the critical success factors of Jewish
entrepreneurs by analysing the results of the questionnaires that were
completed by these entrepreneurs for the primary purpose of this study. The
author aimed to link the findings and results to the literature review where
possible and to either confirm the proposed propositions or discover no
linkages.
The purpose of this chapter will be to discover the links and correlations
between specific variables and success, with success being one of the major
constructs of this paper. As the author previously mentioned, success will be
measured on two variables, the first being turnover and the second being
growth.
Respondents were split into two groups - those who are successful and those
who are less successful. Tarricine and Luca (2002:54) stated that business
success specifically means profit generation. For this study, successful
entrepreneurs were those who had an approximate turnover of more than R2
million rands and increased their headcount by at least three employees per
year since their year of inception. Of all the respondents, 30 out of 32 indicated
the number of employees both at the start of their business and their current
number of employees. In terms of turnover, 31 respondents indicated their
approximate annual turnover. Combining the two variables, 11 respondents had
an annual increase in the number of employees of at least three and an annual
turnover above R2 million, so were
thus considered to be successful
entrepreneurs in this study. On the other hand, 19 respondents had either an
annual increase of less than three employees or an annual turnover below R2
million, so were thus considered to be less successful. Three entrepreneurs
were excluded from this split, two of them because they did not indicate the
number of employees at inception and the other one because they did not
indicate their annual turnover.
6.1 Research Questions and outcome
This study consisted of four propositions. Throughout this chapter the author
will attempt to develop a link between the literature and the results to determine
68
if this study has answered the research propositions, or at some point
challenged the literature or shown supporting correlations between what has
been found.
The author used Microsoft Excel to develope t-tests, Spearman’s Correlation
Analysis and other basic descriptive statistics in order to analyse the data and
present the logical findings.
Research Questions
1. What demographic charateristics are evident amongst successful Jewish
entrepreneurs in South Africa?
2. How has the Jewish community enabled/helped the success of Jewish
businesses in South Africa?
3. What are the key elements of focus within a successful Jewish-owned
business?
4. What diverse factors contribute to the success of Jewish entrepreneurs?
Research Question 1
The author tested how many of the entrepreneurs had used external funding
from financial institutuons in order to raise capital, and how many of them either
used their own or borrowed from family and friends. The author will also show
the education levels of the entrepreneurs,age, gender and some personal
factors about the entrepreneurs
Required External Financial assistance
The table below indicates the proportion of businesses that required financial
assistance in the past 12 months.
Table 13: External financial assistance required
Required External Financial assistance * Success Cross tabulation
69
Success
Required
Less Successful
Successful
Total
Freque
Percent
Freque
Percent
Freque
Percent
ncy
age
ncy
age
ncy
age
Yes
6
33%
6
55%
12
41%
No
12
67%
5
45%
17
59%
18
100%
11
100%
29
100%
External
Financial
assistanc
e
Total
A greater proportion of the successful entrepreneurs (55%) required financial
assistance to meet their financial obligations in the past 12 months compared to
33% for the less successful entrepreneurs.
This shows that more successful entrepreneurs tend to borrow money for the
funding and financial support of their companies. Fuller-Love et-al. (2006) have
shown that ethnic and minority entrepreneurs face challenges of having very
limited access to resources like finance, and mentioned that ethnic
entrepreneurs generally rely on their own social groups’ capital and rely on
members within their community to help them. On the contrary, Arewa (2008)
showed that ethnic entrepreneurs are able to access resources more easily due
to networks and kinship within their communities.
The following section descibes the origin of financial resources
Source of capital
56% of the entrepreneurs used their own capital to fund their business. 34%
used financial institutions such as banks, 16% borrowed money from family, 9%
from friends and the remaining 6% used venture capital. The results are
displayed in figure 5.
70
These results clealy show that the majority of the entrepreneurs use their own
capital, and by having stock in the business they have more to lose at the end
of the day, thus confirming the literature’s view on entrepreneurship and the
level of calculated risk taking (Dana, 2007).
Level of education
When looking at education levels it is clear that the successful entrepreneurs
are 35% more educated than the less successful ones.
The academic education composition of the respondents is indicated in shown
the table below:
Table 14: Level of education in the success groups
Academic Qualification * Success Cross tabulation
Success
Less Successful
Successful
Frequency
Frequency
Percenta
ge
Matric
Diplo
ma
Degre
e
Total
Percent
Frequen
Perce
age
cy
ntage
8
44%
1
9%
9
31%
2
11%
2
18%
4
14%
3
17%
5
45%
8
28%
5
28%
3
27%
8
28%
18
100%
11
100%
29
100%
Postgr
aduate
degre
e
Total
71
The successful group were on average (35%) more educated (with a diploma
and higher qualification) than the less successful group, which had 44% with
matric only. This is supported by Mitchel (2006), who discussed types of
education in entrepreneurship.
Importance of business skills
Independent samples t-tests were conducted to assess
whether there was a significance difference in the importance attached to
different business skills for successful entrepreneurs compared to the less
successful ones. The rating questions were out of 4 and the results are shown
below:
Table 15: Importance of business skills
t-test
Group Statistics
Success
Less
linkages,
Successfu
industry
l
clusters and Successfu
networking
l
Less
Computer
Successfu
literacy
and l
access to the
Successfu
internet
Financial
management
Equality
of
Means
N
Business
for
1
8
1
1
1
8
1
l
1
Less
1
Successfu
8
Mea
n
2.83
Std.
Deviatio
T
P-Value
0.178
0.860
-0.166
0.869
0.560
0.580
n
1.339
2.91
.944
2.89
1.132
2.82
1.079
3.28
0.895
72
, cash flow, l
pricing
and
costing
Successfu
1
l
1
Less
1
Human
Successfu
resource
l
management
Successfu
1
l
1
Less
Successfu
Quality
l
8
1
8
3.45
0.688
2.83
1.043
3.18
0.751
3.06
0.873
management
Successfu
1
l
1
3.27
0.963
0.344
0.758
0.455
0.467
There is no significance difference between the importance attached to all the
business skills between the successful and the less successful entrepreneurs,
since all the p-values of the t-tests were greater than 0.05.
Gender
The gender composition of the respondents is indicated in the
below:
Table 16: Gender in the success group
Gender * Success Cross tabulation
73
Success
Less Successful
Gend
er
Male
Fema
le
Total
Successful
Total
Frequen Percenta Frequen Percenta
Frequen Percenta
cy
ge
cy
ge
cy
ge
15
83%
11
100%
26
90%
3
17%
0
0%
3
10%
18
100%
11
100%
29
100%
The results indicated that within the successful entrepreneurs, all of them
(100%) were males, whilst the less successful were made up of 83% males and
17% females.
Age of respondents
Descriptive statistics were calculated to find age and frequencies for the ‘age’
variable. The average age of the respondents is are shown in the table below:
Table 17: Age of respondents
Group Statistics
t-test for Equality of
Means
Success
Less
Age
Successful
Successful
Frequenc
y
18
10
Mean
46.00
47.90
Std.
Deviation
t
P-Value
-0.333
0.742
14.138
15.022
74
The successful group (47.9 years) is older than the less successful group (46
years), but the difference between the mean age groups is not significant at 5%
significance level. This is because the t-test for the difference between means
resulted in a t-value of -0.333 and a p-value of 0.0742, which is greater than
0.05 (significance level).
Research Question 2
This propositon will be tested by determining how many of the entrepreneurs
have family involved in their current organisation and what their level of
involvment is. This will show how networks through family input play a
significant role in Jewish organisations and the ability to depend of the closest
section of your co-ethnic group.
Family members involved in your business
Respondents were asked if their family were involved in their businesses and
the results are shown below:
Table 18: Family involvement in the success groups
Family members involved in your business * Success Cross tabulation
Success
Family
No
Less Successful
Successful
Total
Freque
Percent
Freque
Percent
Freque
Percenta
ncy
age
ncy
age
ncy
ge
12
67%
6
55%
18
62%
6
33%
5
45%
11
38%
18
100%
11
100%
29
100%
members
involved
your
in Ye
s
business
Total
75
The successful group of respondents indicated a higher involvement of family
members in their business (67%) compared to 55% for the less successful
group.
Thus the data reflects that the more successful organisations have a high level
of family involvment. Now that there is a direct link between these varaibles the
author will show the level of involvement versus the success level.
In the data gathered about the entrepreneurs’ personal opinions, it was
discovered that most Jewish business people view good networks as a very
vital skill in their businesses (63% of the respondents mentioned that it is
extremely important).
Dependent on family to run the business
The results on the dependence on family to run businesses are shown in the
table below:
Table 19: Family dependance to run a successful business
Dependent on family to run the business * Success Cross tabulation
Success
Not
Depend
ent
family
at
all
Successful
Total
Freque
Percent
Freque
Percent
Freque
Percent
ncy
age
ncy
age
ncy
age
14
78%
6
55%
20
69%
2
11%
1
9%
3
10%
2
11%
2
18%
4
14%
of
Moderat
run ely
depend
the
busines ent
to
s
Less Successful
Very
depend
76
ent
Extreme
ly
depend
0
0%
2
18%
2
7%
18
100%
11
100%
29
100%
ent
Total
Results revealed that the less successful group of respondents indicated that
78% were not at all dependent on family help to run their business, compared
to the successful group at 55%. The successful group indicated a higher
dependence on family help to run the business (45%) than the less successful
group (22%).
Furthermore the data has shown the positive correlation between having family
involved in the company and family having a large role in the organisation and
the success rate of these businesses.
Network of family and friends that are self-employed
Results on whether the entrepreneurs have a network of family and friends that
are self-employed are shown in the table below:
Table 20: Successful business with a network of family and friends that
are self-employed
Network of family and friends that are self-employed * Success Cross
tabulation
Success
Less Successful
Successful
Total
Freque
Percent
Freque
Percent
Freque
Percent
ncy
age
ncy
age
ncy
age
83%
10
91%
25
86%
Network of Yes 15
77
family and
friends that
are
self
No
3
17%
1
9%
4
14%
18
100%
11
100%
29
100%
employed
Total
The majority of entrepreneurs from both groups reported having a high
percentage of family and friends that are self-employed, 91% for the successful
group and 83% for the less successful group.
Of the successful group, the statistics have shown that 27% of the
entreprenerurs inherited their current business as opposed to 0% of the
unsuccessful group. This strengthens the argument and shows that the
organisations that had a high family involvment were much more successful
than the companies that did not.
91% of the successful entrepreneurs’ parents also owned their own business,
which shows the type of family culture and the nature of the families within the
Jewish comunities. This once again supports the literature on culture and the
influence it has on Jewish entrepreneurs.
The above correlations show that a vast majority of the entrepreneurs have a
network which they can tap into of family and friends with their own businesses
and a substantial size network. Taras et al., (2009) showed how culture is an
element that is common to a specific set of individuals. These individuals are
part of a group and stable society that has been well known for a long period of
time. This shows the strength of the Jewish communities’ ties and how close
this ethnic group is. Arewa (2008) stated that culture is the spinning of a web
that creates a shared significanc between its members. Furthermore, it is
evident that co-ethnic community support for one another is strong, which
backs up the literature by Salaff (2003) which stated that co-ethnics help and
support each other.
First business you started
78
The table below shows the proportion of respondents who have their current
business as the first business and those who have started other business by
success group:
Table 21: Is this your first business?
Is this your first business * Success Cross tabulation
Success
First
Less Successful
Successful
Total
Frequen
Percent
Freque
Percent
Freque
Percent
cy
age
ncy
age
ncy
age
Yes 11
61%
4
36%
15
52%
No
7
39%
7
64%
14
48%
18
100%
11
100%
29
100%
business
you
started
Total
The majority of the successful entrepreneurs (64%) have started other business
whilst on the other hand majority on less successful entrepreneurs (61%) have
their current businesses as their first business.
How the Entrepreneurs Became Owners
The table below shows an indication of how the respondents became owners of
the businesses.
Table 22: How the entrepreneurs became owners
How you became an owner * Success Cross tabulation
Success
Less Successful
Successful
Total
79
How
you
beca
Freque
Percent Freque
Percent Freque
Percent
ncy
age
ncy
age
ncy
age
8
44%
2
18%
10
34%
9
50%
6
55%
15
52%
0
0%
3
27%
3
10%
1
6%
0
0%
1
3%
18
100%
11
100%
29
100%
I
purchase
d it
me
I founded
owner
it
I inherited
it
Renewed
it
Total
In both of the comparable groups the highest proportion of respondents
founded the businesses. The successful group was at 55% and the less
successful group at 50%. On purchasing the business the less successful
entrepreneurs indicated a higher percentage at 44% compared to the
successful entrepreneurs at 18%. The successful group had a higher proportion
of those who inherited their business (27%) compared to 0% for the less
successful.
Did the entrepreneur’s parents own a business?
80
The distribution of the respondents on whether their parents owned businesses
or not and the success of their businesses is shown in the table below:
Table 23: Did the entrepreneur’s parents own a business?
Parents owned a business * Success Cross tabulation
Success
Parent
Ye
s
s
Less Successful
Successful
Total
Frequen
Percenta
Frequen
Percenta
Frequen
Percenta
cy
ge
cy
ge
cy
ge
14
78%
10
91%
24
83%
4
22%
1
9%
5
17%
18
100%
11
100%
29
100%
owned
a
busine
No
ss
Total
The successful group indicated that 91% of their parents owned a business
while 78% of the less successful group had parents that owned a business.
81
Similarity of business to parent’s
The results on how the respondents rate their businesses similar to their
parents’ businesses are shown in the table below:
Table 24: Similarity of business to parent’s
How is your business similar to your parent's business * Success Cross
tabulation
Success
Not
at
all
Less Successful
Successful
Total
Frequ
Percen
Frequ
Percen
Frequ
Percen
ency
tage
ency
tage
ency
tage
12
86%
3
30%
15
63%
0
0%
4
40%
4
17%
0
0%
1
10%
1
4%
2
14%
2
20%
4
17%
14
100%
10
100%
24
100%
How is your
business
similar
your
Moderat
to ely
Very
parent's
business
Exactly
the
same
Total
The majority of the less successful respondents (86%) indicated that their
businesses were not at all similar to their parents compared to only 30% for the
successful group. Of the successful group, 70% indicated that their businesses
were either moderately, similar, very similar or exactly the same as their
parent’s business, compared to only 14% for the less successful.
82
Personal factors of entrepreneurs
An independent samples t-test was conducted to assess whether there was a
significance
difference
between
the
personal
factors
of
successful
entrepreneurs compared to the less successful ones. The results are shown
below:
Table 25: Personal factors of entrepreneurs
t-test for Equality
Group Statistics
of Means
Success
N
Less
High
level
Mean
Std.
Deviation
of Successful
18 4.39
Successful
10 4.30
.483
give
Less
up Successful
18 4.44
.511
Successful
11 4.82
.405
18 4.33
.767
easily
Like a challenge
Less
Successful
P-Value
-.455
.653
2.180
.039
.116
.908
.502
achievement
Don’t
t
83
Successful
Less
Optimistic
Successful
Successful
Less
Like to work on Successful
own
Successful
Less
Quick to make a Successful
decision
Successful
Less
Like to take high Successful
risks
Successful
Less
Like
to
take Successful
medium risks
Successful
Less
Like to take low Successful
risks
Successful
11 4.36
.505
18 4.28
.895
11 4.36
.809
18 3.50
1.383
11 3.27
1.348
18 3.83
1.339
11 3.55
1.128
18 2.28
1.227
11 2.82
1.079
17 2.71
1.263
10 3.80
.919
17 3.18
1.380
10 2.80
.260
.797
-.436
.667
-.594
.557
1.202
.240
2.385
.025
-.696
.493
1.317
A negative t-value indicates that the less successful entrepreneurs agree with
the factor more than the successful ones, and a positive t-value indicates that
the successful agree more than the less successful. A p-value less than 0.05
indicates that the difference between the successful and the less successful is
significant at 5% significance level and a p-value greater than 0.05 indicates
that the difference is not significant.
84
The results show that successful entrepreneurs do not give up easily and they
like to take medium risks more than their less successful counterparts.
Motivation for starting a business
Independent samples t-tests were also conducted to assess whether there was
a significance difference between the motivation to start a business for
successful entrepreneurs as compared to the less successful ones. The results
are shown below:
Table 26: Motivation for starting a business
t-test for Equality
Group Statistics
of Means
Success
Less
Successf
Wanted greater freedom to ul
adopt own approach to work
Successf
ul
Less
Successf
Had been out of work for a ul
period of time
Successf
ul
Less
Successf
Always wanted to be my own ul
boss
Successf
ul
M
Std.
N ea
Devi
n
ation
1 4.
1.25
7 24
1
1 3.
1.12
1 55
8
1 1.
7 53
1 1.
0 60
-1.479
0.151
0.195
0.847
0.440
0.664
.966
1.22
7 00
5
1 18
P-Value
.874
1 4.
1 4.
t
.751
85
Less
Successf
Wanted to make more money ul
than was earning before
Successf
ul
Less
Successf
Had been made redundant
ul
Successf
ul
Less
Successf
Wanted to challenge myself
ul
8
1 3.
1.10
0 90
1
1 1.
7 53
9
1.
22
1 4.
8 17
3
1 2.
1.56
8 89
8
Less
Wanted to develop previous Successf
experience/ hobby into a ul
2.
1.23
44
6
1 1.
1.13
7 82
1
Successf
1 1.
1.19
ul
0 90
7
1 2.
1.37
7 47
5
Less
Successf
ul
-1.456
0.160
-2.446
0.022
-0.741
0.466
0.166
0.869
0.579
0.568
.985
0 20
ul
0.749
.441
ul
9
-0.324
.624
1.03
Was dissatisfied with previous ul
job
Successf
of someone I admired
7 06
1 3.
Successf
Wanted to follow the example
1.29
Successf
Less
business
1 4.
86
Successf
ul
Less
Successf
Thought I would get more ul
respect working for myself
Successf
ul
Less
Successf
Wanted to continue a family ul
tradition
Successf
ul
9
2.
1.09
78
3
1 2.
1.08
7 94
8
1 3.
1.37
0 10
0
1 2.
1.32
7 47
8
1 3.
1.52
0 10
4
0.333
0.742
1.127
0.271
The only significant difference is that the less successful agreed with wanting to
challenge
themselves
as
the
motivation
more
than
their
successful
counterparts. This is because of a negative t-value and a p-value of 0.022,
which is less than 0.05 (significance level).
Research Question 3
As the primary focus group of this study is Jewish entrepreneurs and the
percieved success of these entrepreneurs, the author aimed to test whether the
number of hours each entrepreneur works per day and how many businesses
each entrepreneur has started (business experience) has any impact or
correlation on whether or not the entrepreneur is successful. The literature has
developed two measures of success, namely growth and turnover (Chivukula
et-al., 2009).
The four relationships will be as follows:
1) Education and the business start-up experience of the entrepreneur
87
2) Education and the amount of time the entrepreneur works in terms of
hours
3) The amount of hours the entrepreneur works and the growth of the
organisation
4) The amount of hours worked and business start-up experience of the
entrepreneur and the current age of the organisation
These relationships will give a good indication as to whether they have an
impact on the success of Jewish entrepreneurs in South Africa.
1) Relationship between education and business start-up experience of the
entrepreneur
H0: There is no association between academic qualification and whether one
has started more than one business or not.
H1: There is an association between academic qualification and whether one
has started more than one business or not.
To test this hypothesis a Spearman’s Correlation Analysis was conducted
between the academic qualifications against the number of businesses started
by an individual. The number of businesses started by an individual was only
answered by those who mentioned that their current business was not their first
business, thus for the number of businesses started, each person who
mentioned that their current business was the first one for them, 1 was put on
the number of businesses started. The scale for education was changed to 1 for
Standard 5 up to 9 for postgraduate degree so that it was on an increasing
ordinal scale. Spearman’s Correlation was used because one of the variables
(academic education) was ordinal. The results are shown below:
Table 27: Academic Qualification and the number of businesses started
88
Correlations
Academic
Number
Qualificatio
Businesses
n
Started
1.000
-0.160
Sig. (2-tailed)
-
0.382
N
32
32
-0.160
1.000
Sig. (2-tailed)
0.382
-
N
32
32
Spearma
Academic
Correlation
n's rho
Qualificatio
Coefficient
n
Number of
Correlation
Businesse
Coefficient
s Started
of
The results revealed that although there is a negative correlation between
education and number of businesses started (-0.160), the relationship is not
significant at 5% significance level because the p-value for the test is 0.382
which is greater than 0.05. Thus the null hypothesis cannot be rejected and
conclude that there is no association between academic qualification of Jewish
business people and whether one has started more than one business or not
(success).
2) Relationship between education and number of hours worked
H0: There is no association between academic qualification and number of
hours worked.
H1: There is an association between academic qualification and number of
hours worked.
89
To test this hypothesis a Spearman’s Correlation Analysis was conducted
between the academic qualifications against the number of hours worked. The
scale for education was changed to 1 for Standard 5 up to 9 for postgraduate
degree so that it was on an increasing ordinal scale. Spearman’s Correlation
was used because one of the variables (academic education) was ordinal. The
results are shown below:
Table 28: Academic qualification and the number of hours worked per day
Correlations
Academic
Hours
Qualificati
worked
on
per day
1.000
0.088
Sig. (2-tailed)
-
0.632
N
32
32
0.088
1.000
Sig. (2-tailed)
0.632
-
N
32
32
Spearman's
Academic
Correlation
rho
Qualification
Coefficient
Hours
per day
worked
Correlation
Coefficient
The results revealed that the correlation between education and number of
hours worked was very weak (r = 0.088). The relationship was not significant at
5% significance level because the p-value for the test is 0.632 which is greater
than 0.05. Thus the null hypothesis cannot be rejected and there is no
association between academic qualifications of Jewish business people and the
number of hours worked.
90
3) Relationship between number of hours worked and growth
(increase in employees)
H0: There is no association between number of hours worked and growth
(increase in employees).
H1: There is an association between number of hours worked and growth
(increase in employees).
To test this hypothesis a Spearman’s Correlation Analysis was conducted
between the numbers of hours against the increase in employees per year. The
increase in the number of employees per year was found by dividing the
difference between the number of employees when the business started and
the current number of employees by the number of years that the business had
been in existence. Spearman’s Correlation was used because one of the
variables (number of hours worked) was ordinal. The results are shown below:
Table 29: Increase in the number of employees per year and hours worked
per day
Correlations
Increase
in
Hours
number
of
worked
per
per day
Employees
year (Growth)
Spearma
Increase
in
Correlation
n's rho
number
of
Coefficient
Employees
per
(Growth)
year
1.000
0.114
Sig. (2-tailed)
-
0.550
N
30
30
91
Hours worked
Correlation
per day
Coefficient
0.114
1.000
Sig. (2-tailed)
0.550
-
N
30
32
The results revealed that the correlation between growth and number of hours
worked is weak (r = 0.114). The relationship is not significant at 5% significance
level because the p-value for the test is 0.550 which is greater than 0.05. Thus
the null hypothesis cannot be rejected and there is no association between
number of hours worked and growth (increase in employees per year).
4) Relationship between number of hours worked and business startup experience of the entrepreneur and the current age of the
organisation
H0: There is no association between number of hours worked and number of
businesses started.
H1: There is an association between number of hours worked and number of
businesses started.
To test this hypothesis a Spearman’s Correlation Analysis was conducted
between the numbers of hours worked against number of businesses started.
Spearman’s Correlation was used because one of the variables (number of
hours worked) was ordinal. The results are shown below:
Table 30: Hours worked per day and number of businesses started by the
entrepreneur
Correlations
Hours
worked
Number
of
92
per day
business
es started
Correlation
Hours
worked
per day
Spear
Coefficient
1.000
0.159
Sig. (2-tailed)
-
0.558
N
32
16
0.159
1.000
Sig. (2-tailed)
0.558
-
N
16
16
man's
Correlation
rho
Number
businesses
started
of
Coefficient
The results revealed that the correlation between number of businesses started
and number of hours worked is weak (r = 0.159). The relationship is not
significant at 5% significance level because the p-value for the test is 0.558
which is greater than 0.05. Thus, the null hypothesis cannot be rejected and it
can be concluded that there is no association between number of hours worked
and the number of businesses started.
The results show there is no direct relationship between any of the above
vairiable and the success of Jewish entrepreneurs in South Africa.
Number of years the business has existed
The table below shows the number of years the business has existed for split
into the success groups:
Table 31: Number of years the business has existed
Group Statistics
T-test for Equality
of Means
93
Frequenc
Success
y
Mean
Std.
Deviation
t
P-value
.059
.953
Less
Years of Successfu 18
existenc l
e
Successfu
l
11
21.28
20.73
27.020
19.257
Although successful businesses (20.73 years old) are slightly younger than the
less successful businesses (21.28 years old), the difference between the mean
age groups is not significant at 5% significance level. This is because the t-test
for the difference between means resulted in a t-value of 0.059 and a p-value of
0.953, which is greater than 0.05 (significance level).
94
Approximate value
The respondents were asked about the approximate values of their businesses
and the results are indicated in the table below:
Table 32: Approximate value
Approximate value * Success Cross tabulation
Success
<R1
000 000
Less Successful
Successful
Total
Freque
Percent
Freque
Percent
Freque
Percent
ncy
age
ncy
age
ncy
age
2
11%
0
0%
2
7%
3
17%
0
0%
3
10%
13
72%
11
100%
24
83%
18
100%
11
100%
29
100%
R1 000
Approxi
000
-
mate
R2 000
value
000
>
R20000
00
Total
All the successful entrepreneurs (100%) had p=businesses with an approximate
value of more than R2 million compared to 72% of the less successful
business.
Research Question 4
95
The purpose of this question is to investigate what element of the business the
entrepreneurs spend most of their time on. The relevance of this is to try to
discover if there are any elements that contribute more to the success of one
organisation than another.
There will also be a brief view at the market that these entrepreneurs opporate
in.
Hours worked per day
The respondents were asked on the number of hours that they work per day
and the results are shown in the table below:
Table 33: Hours worked in the success groups
Hours worked per day * Success Cross tabulation
Success
0 - 5
Hours
Hours
worked
5 - 10
per day
hours
11
Less Successful
Successful
Total
Freque
Percent
Freque
Percent
Freque
Percent
ncy
age
ncy
age
ncy
age
1
6%
0
0%
1
3%
6
33%
4
36%
10
34%
9
50%
6
55%
15
52%
2
11%
1
9%
3
10%
-
15
Hours
>
15
hours
96
Total
18
100%
11
100%
29
100%
The highest proportions in both groups work between 11 and 15 hours per day,
50% for the less successful and 55% for the successful. Both groups were also
similar in working more than 15 hours per day - the less successful at 11% and
successful at 9%.
From this the author can deduce that there is no specific correlation between
the amount of hours each entrepreneur works per day as the results for both
groups are very similar.
Number of hours spent on financial matters per day
The number of hours spent on handling the business’ financial issues is
indicated in the table below:
Table 34: Time spent on the financial matters in the success groups
Financial issues * Success Cross tabulation
Success
0 - 1
Financial
hours
issues
2 - 3
hours
Less Successful
Successful
Total
Freque
Percent
Freque
Percent
Freque
Percent
ncy
age
ncy
age
ncy
age
5
31%
5
50%
10
38%
6
38%
4
40%
10
38%
97
>3
hours
Total
5
31%
1
10%
6
23%
16
100%
10
100%
26
100%
Half of the respondents in the successful group (50%) spent 0 – 1 hour per day
on financial issues compared to 31% from the less successful group. On the
other hand, 31% of the less successful entrepreneurs spend more than three
hours on financial issues in the business per day compared to only 10% of the
successful group. This indicates that financial issues are not a primary task that
the successful entrepreneurs focus on.
Number of hours spent on marketing/sales issues per day
The number of hours spent on handling the business’ marketing/sales issues is
indicated in the table below:
Table 35: Time spent on marketing and sales in the success groups
Marketing/ Sales * Success Cross tabulation
Success
Less Successful
Successful
Total
Freque
Percent
Freque
Percent
Freque
Percent
ncy
age
ncy
age
ncy
age
98
0 - 1
hours
Marketin
2 - 3
g/ Sales
hours
>3
hours
Total
3
18%
2
20%
5
19%
9
53%
5
50%
14
52%
5
29%
3
30%
8
30%
17
100%
10
100%
27
100%
The distribution of the amount of time spent on marketing/sales issues is almost
the same for both groups, with 53% of the less successful spending 2 – 3 hours
in this field compared to 50% for the successful group. This element clearly
holds a lot of value in terms of the amount of time spent on it in comparison to
financial issues for successful entrepreneurs.
Number of hours spent on managing people per day
The number of hours spent on managing people per day is indicated in the
table below:
Table 36: Number of hours spent managing people in the success groups
Managing People * Success Cross tabulation
Success
99
Less Successful
Successful
Total
Frequen Percenta Frequen Percenta Frequen Percenta
0
cy
ge
cy
ge
cy
ge
1
7%
2
20%
3
12%
8
53%
3
30%
11
44%
6
40%
5
50%
11
44%
15
100%
10
100%
25
100%
-
1
hou
rs
Managi
2
-
ng
3
People
hou
rs
>3
hou
rs
Total
The majority of the less successful group (53%) spends 2 – 3 hours per day
managing people, compared to 30% for the successful group. Half of the
successful entrepreneurs spend more than 3 hours per day managing people
compared to 40% for the less successful entrepreneurs.
Managing people clearly seems to be a major focus area when running a
successful organisation for the Jewish entrepreneurs.
100
Number of hours spent on operational issues per day
The number of hours spent on operational issues is indicated in the table
below:
Table 37: Number of hours spent on operational issues in the success
groups
Operational issues * Success Cross tabulation
Success
0
Successful
Total
Freque
Percent
Freque
Percent
Freque
Percent
ncy
age
ncy
age
ncy
age
6
33%
3
27%
9
31%
7
39%
4
36%
11
38%
5
28%
4
36%
9
31%
18
100%
11
100%
29
100%
-
1
hou
Operatio
Less Successful
rs
nal
issues
2
-
3
hou
rs
>3
hou
rs
Total
The amount of time spent on operational issues is almost the same for both the
successful and the less successful entrepreneurs. There is clearly no
101
correlation
between
operational
issues
and
the
success
of
Jewish
entrepreneurial firms.
The author will analyse the rest of the data gathered through the questionnaire
in order to further explain the findings and to challenge or support the literature.
Description of the market
The table below indicates results on the market in which the entrepreneurs
operate:
Table 38: Market description
Description of the market * Success Cross tabulation
Success
Less Successful
Successful
Total
Frequ
Percen
Frequ
Percen
Frequ
Percen
ency
tage
ency
tage
ency
tage
6
33%
4
36%
10
34%
on of the competitors
that
are 6
market
33%
4
36%
10
34%
17%
3
27%
6
21%
Many
competitors
with
fixed
prices
Descripti
Few
highly
competitive
Few
competitors 3
with
102
variable
prices
Not sure
1
6%
0
0%
1
3%
1
6%
0
0%
1
3%
are 1
6%
0
0%
1
3%
100%
11
100%
29
100%
Many
competitors
with
varying
prices
Many
competitors
that
highly
competitive
Total
18
All but one respondent were able to identify the market in which they operate.
The distribution is almost the same for both the successful and the less
successful.
Conclusion
This chapter clearly showed the different variables that have an impact on the
Jewish entrepreneurs that partook in the study. The four research questions
were clearly answered and the results were shown. From this the author had
illuminated the key areas of success and the areas that have no significant
impact on the success of Jewish entrepreneurs in South Africa.
103
Chapter 7: Conclusion
7.1 Introduction
Culture, success and entrepreneurship are widely researched topics throughout
the world, but when narrowing it down and applying these topics to a South
African aspect and then further down by applying them to a Jewish
entrepreneurs specifically , it is clear that not much research has been done in
this specific frame. This aim of this paper was to explore the relationship
beyween these factors and the success of Jewish entrepreneurs in South
Africa.
This study categorised the Jewish entrepreneurs into two groups, namely
successful and less successful entrepreneurs. Many factors were used to
measure and test these groups.
7.2 Summation of the literature
The literature discussed in this study funnels down from a broad perspective of
entrepreneurship to a closer look at an ethnic group such as Jewish
entrepreneurs in South Africa. From this the author has provided a great
understanding of what the
entrepreneurship phenomenon is. The types of
entrepreneurs were discussed in detail and the impact entrepreneurship has on
economic growth in South Africa as shown by the TEA results. Furthermore the
author used success as the basis to measure the entrepreneurs in the study.
As the literature has shown there are meaning and understandings of the word
success but for the purpose of this study there were two elements used to
measure success that were turnover and growth. This classified the
entrepreneurs in groups being successful and les successful. The next core
constructs that were discussed played a major role in the study. They were
culture and ethnic groups. From this study it is evident that the Jewish
community in South Africa form an ethnic group. As Jewish entrepreneurs are
the basis of this study it was vital to discuss the element of culture and the role
it plays in ethnic groups. The history of the Jewish ethnic group was discussed
as well as the arrival of the Litvak Nation. The Jewish community’s ethnic
relationship and ties were elaborated on and how the co-ethnic counterparts in
104
this community help contribute to the success of the Jewish community in
South Africa.
7.3 Research questions
The purpose of this study was to critically evaluate the success of Jewish
entrepreneurs in South Africa. For the purpose of this study the following four
research questions were posed.
1. What demographic characteristics are evident in successful Jewish
entrepreneurs in South Africa?
2. How has the Jewish community enabled/helped the success of Jewish
businesses in South Africa?
3. What are the key elements of focus within a successful Jewish-owned
business?
4. What diverse factors contribute to the success of Jewish entrepreneurs?
Through the means of a questionnaire, information was gathered to answer the
above questions.
7.4 Findings
From the results it is evident that there is very little difference between the
successful group and the less successful group. There was a noticeable
difference in the personal factors of the successful entrepreneurs and the less
successful entrepreneurs, however. There was a clear indication that the more
highly educated entrepreneurs were in general, the more successful they were,
but there was no major difference between the entrepreneurs who worked more
hours a day than the others.
When analysing the specific elements where the entrepreneurs spent most of
their time, it was evident that of the successful group, not many of them spent a
lot of time on financial issues or operational issues on a daily basis.
105
The marketing and sales aspect of the business received fairly equal attention
between the two success groups, but this element still got more attention than
the the finance element.
The area that gets the most attention in the successful group was the number
of hours each Jewish entrepreneur spends a day on managing people. This
seems to be the most significant area of attention for these entrepreneurs.
From the results it is evidant that there is very little family involvememt in
Jewish successful organisations.
Going forward majority of the entrepreneurs want to increse to the size of their
existing business and increase the number of people they employ.
As the results show majority of the external financial requirments come from
financial institutions this will be the main area of funding for the entrepreneurs
when they are looking to fund expantion
7.5 Contribution
Through this study there has been a contribution towards the field of
entrepreneurship and to the Jewish people in South Africa in specific elements
such as:
•
The role and impact family members have towards the success of a
succssful Jewish-owned organisation
•
The contribution of the Jewish co-ethnic community has and its impact
on the Jewish Litvak people.
•
How education levels, the number of hours worked and the level of
business experience each entrepreneur has and its correlation to the
success of a Jewish owned organisation.
•
How Jewish demographics and education contribute to the success of an
organisation.
•
The personality traits of these Jewish entrepreneurs and how they have
an effect on their ability to run a successful organisation.
106
7.6 Further research
Futher research should be done in the following fields:
•
The author recommends further research be done in order to compare
the Jewish entrepreneurs in South Africa to the Jewish entrepreneurs in
the rest of the world.
•
A comparison of Jewish entrepreneurs to other ethnic entrepreneurial
groups in South Africa to get a greater understanding of what
differentiates the Jewish entrepreneurs from the rest.
•
A study into the Jewish way of life and the culture that it represents to
get a better understanding of how the Jewish mind operates.
•
The impact religon makes on decision-making and how the Jewish
religon contributed to the success of Jewish-owned businesses today.
•
The impact Jewish family ties have on the success of Jewish-owned
organisations, and the true make up of a family business in the Jewish
community.
•
Further reserch should be done in a qualitative form in order to get a
greater insight into the entrepreneur and to allow the entrepreneur to
priovide his personal view and opinion on the matter.
7.7 Limitations of the study
•
There is very limited secondary information about Jewish entrepreneurs
in the South African region.
•
The use of a quantitative study was very limiting as the entrepreneurs
did not get the opportunity to express their real thoughts and their
opinions were limited by the questions in the questionnaire. This may not
give an accurate understanding of what truly makes these entrepreneurs
so successful.
•
The ability to access these types of entrepreneurs poses a challenge
and once one does have access to these entrepreneurs, they are
generally very pressed for time and may not be as willing to help.
•
There is a very small number of Jewish successful entrepreneurs in
South Africa.
107
•
The sample size was a major limiting factor
7.8 Conclusion
The primary purpose of this study was to explore the perception of why Jewish
entrepreneurs are perceived to be so successful and what the key elements are
that contribute to the success of these entrepreneurs in a South African context.
This study went on define success and the factors that were used to measure
and categorise these entrepreneurs into successful and less successful ethnic
entrepreneurs.
This study has also illuminated the impact of culture on entrepreneurship and
how culture plays a major role in the Jewish community in South Africa. This
ethnic group is held together by its culture and the closeness of its co-ethnic
community .
This study aims to contribute to the body of knowledge of entrepreneurship and
attempts to be able to categorise all types of entrepreneurs from different
cultural backgrounds.
108
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